UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934

For The Fiscal Year Ended December 31, 1999

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
(NO FEE REQUIRED)

For the transition period from ____________ to ____________.

Commission File Number 0001-000052

SUNBEAM CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE 25-1638266
(State or other jurisdiction (I.R.S. Employer Identification Number)
incorporation or organization)

2381 Executive Center Drive
Boca Raton, Florida 33431
(Address of principal executive offices) (Zip Code)

(561) 912-4100
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

Title of each class: Name of exchange on which registered:
Common Stock, $0.01 Par Value New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]

The aggregate market value of all classes of the registrant's voting stock held
by non-affiliates as of April 25, 2000 was approximately $279,782,089.

On April 25, 2000, there were 107,555,061 shares of the registrant's Common
Stock outstanding.

SUNBEAM CORPORATION AND SUBSIDIARIES
ANNUAL REPORT
ON FORM 10-K

TABLE OF CONTENTS

Page

PART I

ITEM 1. Business

General................................................................................................... 3
Products and Operations................................................................................... 3
Competition............................................................................................... 7
Customers................................................................................................. 8
Backlog................................................................................................... 8
Patents and Trademarks.................................................................................... 8
Research and Development.................................................................................. 8
Employees................................................................................................. 8
Seasonality............................................................................................... 8
Raw Materials/Suppliers................................................................................... 8
Regulatory Matters........................................................................................ 9
Significant 1998 Financial and Business Developments...................................................... 9
ITEM 2. Properties................................................................................................ 12
ITEM 3. Legal Proceedings......................................................................................... 12
ITEM 4. Submission of Matters to a Vote of Security Holders....................................................... 17

PART II

ITEM 5. Market For Registrant's Common Equity and Related Shareholder Matters..................................... 19
ITEM 6. Selected Financial Data................................................................................... 21
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations..................... 22
ITEM 8. Financial Statements and Supplementary Data............................................................... 44
ITEM 9. Changes In And Disagreements With Accountants On Accounting And Financial Disclosure...................... 44

PART III

ITEM 10. Directors and Officers of the Registrant.................................................................. 45
ITEM 11. Executive Compensation.................................................................................... 45
ITEM 12. Security Ownership of Certain Beneficial Owners and Management............................................ 45
ITEM 13. Certain Relationships and Related Transactions............................................................ 45

PART IV

ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K........................................... 46
Signatures................................................................................................ 48

- 2 -

PART I

ITEM 1. BUSINESS

GENERAL

Sunbeam Corporation ("Sunbeam" or the "Company") is a leading designer,
manufacturer and marketer of branded consumer products. The Company's primary
business is the manufacturing, marketing and distribution of durable household
and outdoor leisure consumer products through mass market and other distribution
channels in the United States and internationally. The Company also sells its
products to professional and commercial end users such as small businesses,
health care providers, hotels and other institutions. The Company's principal
products include household kitchen appliances; health monitoring and care
products for home use; scales for consumer and professional use for weight
management and business uses; electric blankets and throws; clippers and
trimmers for consumer, professional and animal uses; smoke and carbon monoxide
detectors; outdoor barbecue grills; camping equipment such as tents, lanterns,
sleeping bags and stoves; coolers; backpacks and book bags; and portable
generators and compressors. The Company, through its Thalia Products, Inc.
("Thalia") subsidiary, is developing Home Linking Technology(TM) or HLT(TM),
which is designed to allow products to communicate with each other.

In 1998, the Company acquired an indirect controlling interest in The Coleman
Company, Inc. ("Coleman") and all the outstanding common stock of Signature
Brands USA, Inc. ("Signature Brands") and First Alert, Inc. ("First Alert").
(See "Significant 1998 Financial and Business Developments--The 1998
Acquisitions," below.) In January 2000, the Company acquired the remaining
publicly held interest in Coleman.

The Company entered into an agreement dated March 18, 2000 with VF Corporation
(the "Eastpak Sale Agreement") to sell its worldwide Eastpak(TM) branded
business ("Eastpak"). The purchase price is subject to certain post-closing
adjustments and retention of certain liabilities by the Company. The sale of
Eastpak is subject to customary conditions, including expiration of applicable
waiting periods and/or clearance under applicable United States and German
antitrust regulations. Pursuant to the Eastpak Sale Agreement, the Company will
retain its Timberland branded business which it conducts pursuant to a license
from Timberland Corporation.

PRODUCTS AND OPERATIONS

The Company's operations are managed through four groups: Household, Outdoor
Leisure, International and Corporate. The Household and Outdoor Leisure
operating groups encompass the following products:

/bullet/ In the Household group:

(1) Appliances--including mixers, blenders, food
steamers, breadmakers, rice cookers, coffee makers,
toasters, irons and garment steamers;

(2) Health products--including vaporizers, humidifiers,
massagers, hot and cold packs, blood pressure
monitors, and scales;

(3) Personal care--including hair clippers and trimmers
and related products for the professional beauty,
barber and veterinarian trade and sales of products
to commercial and institutional channels;

(4) Blankets--including electric blankets, heated throws
and mattress pads; and

(5) First Alert--including smoke and carbon monoxide
detectors, fire extinguishers and home safety
equipment.

/bullet/ In the Outdoor Leisure group:

(1) Outdoor recreation products--including tents,
sleeping bags, coolers, camping stoves, lanterns,
frame backpacks and outdoor heaters;

(2) Outdoor cooking products--including gas and charcoal
outdoor grills and grill parts and accessories;

(3) Powermate products--including portable power
generators and air compressors; and

(4) Eastpak and Timberland branded products--including
adventure travel gear, backpacks, hard cases and
luggage.

/bullet/ The International group is managed through the following
regional subdivisions:

(1) Europe--manufacture, sales and distribution of
Campingaz(R)products and sales and distribution in
Europe, Africa and the Middle East of other Company
products;

(2) Latin America--manufacture, sales and distribution
throughout Latin America of small appliances, and
sales and distribution of personal care products,
professional clippers and related products, camping
products and Powermate products;

(3) Japan--sales and distribution of primarily outdoor
recreation products;

(4) Canada--sales and distribution of substantially all
the Company's products; and

(5) East Asia--sales and distribution in all areas of
East Asia other than Japan of substantially all of
the Company's products.

The Corporate group provides certain management, accounting, legal, risk
management, treasury, human resources, tax and management information services
to all operating groups and also includes the operations of the Company's retail
stores and the conduct of the Company's licensing activities.

See Note 14 of Notes to Consolidated Financial Statements for financial data
concerning the Company's operating segments. Also, for a discussion of certain
risks affecting the Company's business, see the discussion in Item
7--"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, in particular, the discussion contained therein under the
subheading--"Cautionary Statements."

HOUSEHOLD

The Company's Household group includes appliances, health products, scales,
personal care products, blankets and First Alert products. Net sales of
Household group products accounted for approximately 43%, 50% and 73% of the
Company's consolidated net sales in 1999, 1998 and 1997, respectively. There
were no Household group products or group of similar products with sales that
accounted for 10% or more of consolidated net sales in any of the last three
fiscal years.

APPLIANCES. Small kitchen appliances include Mixmaster(R) stand mixers, hand
mixers, Osterizer(R) blenders, food processors, rice cookers, food steamers,
toasters, can openers, breadmakers, waffle makers, ice cream makers, frying
pans, deep fryers and culinary accessories, which are sold primarily under the
Sunbeam(R) and Oster(R) brand names. In addition, the Company sells coffee
makers under the Mr. Coffee(R), Sunbeam and Oster brand names and, with respect
to coffee and tea products, the Mr. Coffee brand name. Other brand names or
trademarks used in marketing include: Toast Logic(R), Gold Toast(R), Details(R)
by Mr. Coffee for high end coffeemakers sold in department and specialty stores,
Mrs. Tea(TM), Iced Tea Pot(TM), Oster Designer(R) and Pause N Serve(R). The
Company holds the number one or two market positions in coffee makers,
standmixers, blenders, citrus juicers and vegetable steamers. Appliances also
encompass garment care appliances consisting of irons and steamers. The Company
manufactures a portion of its appliances in its United States and Mexico plants
and sources the balance of its appliance products from domestic and foreign
manufacturers.

HEALTH. The Company markets many of its health products under the Sunbeam(R)
name and the trademark Health at Home(R). These products include heating pads,
bath scales, blood pressure and other health-monitoring instruments, massagers,
vaporizers, humidifiers and dental care products. The Company assembles and/or
manufactures its vaporizers, humidifiers and heating pads at its United States
and Mexico facilities. The Company's other personal health products are sourced
from manufacturers primarily located in China.

The Company also designs, manufactures and markets scales for consumer, office
and professional use. The Company manufactures a complete line of analog and
digital floor scales, waist-high and eye-level scales for use in weight
monitoring by consumers. These consumer scales are sold under the brand names
Health o Meter(R), Sunbeam, Counselor(R) and Borg(R). The Company also markets
professional scales such as traditional balance beam scales, pediatric scales,
wheelchair ramp scales, chair and sling scales and home healthcare scales using
the Pro Series(R) and Pro Plus Series(R) trademarks in addition to the Health o
Meter brand. The Company's line of scales also includes letter and parcel scales
for office use, marketed under the Pelouze(R) brand name. The Company has a
substantial share of the office scale market with its Pelouze scales. The
Company's Pelouze food scales include analog and digital portion control scales,
thermometers and timers for commercial and non-commercial applications. Sunbeam
manufactures approximately one-half of its scales at a United States plant and
sources the remaining scales from both domestic and foreign suppliers.

PERSONAL CARE. The Company markets a line of professional barber, beauty and
animal grooming products, including electric and battery clippers, replacement
blades and other grooming accessories sold to both conventional retailers and
through professional distributors. The Company holds the number one or two
positions in its clipper and trimmer product lines. The Company's personal care
products also include a broad line of hair clippers and trimmers for animals
which are sold through retail channels. These products are manufactured at the
Company's United States and Mexico facilities.

BLANKETS. The Company's blanket products include electric blankets, Cuddle-Up(R)
heated throws and heated mattress pads. The Company holds the number one market
position in each of electric blankets, heated throws and heated mattress pads.
These products are manufactured at the Company's United States and Mexico
facilities.

FIRST ALERT. First Alert is a leading manufacturer and marketer of a broad range
of residential safety products, including ionization and photoelectric smoke
detectors sold in the retail channel in which First Alert has the leading market
share. Other products include carbon monoxide detectors, fire extinguishers,
rechargeable flashlights and lanterns, electric and electromechanical timers,
night lights, radon gas detectors, fire escape ladders and motion sensing
lighting controls. First Alert's smoke detectors are battery-operated or wired
into a home's electrical system. Carbon monoxide detectors are available in both
plug in and battery-operated units. First Alert also manufactures and markets
combination ionization and photoelectric smoke detectors and combination smoke
detectors and carbon monoxide detectors. These products are marketed primarily
under the First Alert(R) brand name. First Alert also uses the brand names
Family Gard(R) and Sure Grip(R) for certain of its products. First Alert markets
certain smoke detectors and other products under the BRK(R) brand for the
electrical wholesale markets. First Alert manufactures its smoke and carbon
monoxide detectors in its Mexico plant, manufactures fire extinguishers in its
United States plant and sources other products from domestic and foreign
suppliers.

OUTDOOR LEISURE

The Company's Outdoor Leisure group includes products for outdoor recreation and
outdoor cooking, as well as the Powermate, Eastpak and Timberland product lines.
Following the consummation of the Company's sale of Eastpak, Eastpak products
will no longer be included in this group. Net sales of the Outdoor Leisure group
accounted for approximately 56%, 50%, and 25% of the Company's consolidated net
sales in 1999, 1998 and 1997, respectively. Except as discussed below, there
were no Outdoor Leisure products or groups of similar products with sales that
accounted for 10% or more of consolidated net sales in any of the last three
fiscal years.

OUTDOOR RECREATION. Principal outdoor recreation products include a
comprehensive line of lanterns and stoves for outdoor recreational use,
fuel-related products such as disposable fuel cartridges, a broad range of
coolers and jugs, sleeping bags, backpacks, tents, outdoor folding furniture,
portable electric lights, camping accessories and other products. These products
are used predominantly in outdoor recreation, but many products have
applications in emergency preparedness and some are also used in home
improvement projects. These products are distributed predominantly through mass
merchandisers, home centers and other retail outlets. The Company believes it is
the leading manufacturer of lanterns and stoves for outdoor recreational use in
the world. The Company's liquid fuel appliances include single and dual
fuel-powered lanterns and stoves and a broad range of propane- and butane-fueled
lanterns and stoves. These products are manufactured at the Company's facilities
located in the United States and are marketed under the Coleman(R) and Peak
One(R) brand names.

The Company manufactures and sells a wide variety of insulated coolers and jugs
and reusable ice substitutes, including personal coolers for camping, picnics or
lunch box use; large coolers; beverage coolers for use at work sites and
recreational and social events; and soft-sided coolers. The Company's cooler
products are manufactured predominantly at the Company's facilities located in
the United States and are marketed under the Coleman brand name worldwide. The
Company designs, manufactures or sources, and markets textile products,
including tents, sleeping bags, backpacks and rucksacks. The Company's tents and
sleeping bags are marketed under the Coleman and Peak One brand names. The
Company manufactures and markets aluminum- and steel-framed, portable, outdoor,
folding furniture under the Coleman and Sierra Trails(R) brand names. These
products are manufactured predominantly at the Company's facilities located in
the United States. The Company also markets a line of inflatable furniture under
the Coleman brand name for indoor and outdoor use. These products are primarily
manufactured by third party vendors to the Company's specifications. The Company
designs and markets electric lighting products that are manufactured by others
and sold under the Coleman, Powermate and Job-Pro(R) brand names. These products
include portable electric lights such as hand held spotlights, flashlights and
fluorescent lanterns and a line of rechargeable lanterns and flashlights. The
Company designs, sources and markets a variety of small accessories for camping
and outdoor use, such as cookware and utensils. These products are sourced from
domestic and foreign suppliers.

OUTDOOR COOKING. The Company is a leading supplier of outdoor barbecue grills
and has one of the leading market shares in the gas grill industry. Outdoor
barbecue grills consist of gas, electric and charcoal models which are sold by
the Company primarily under the Sunbeam, Grillmaster(R) and Coleman brand names.
The Company's outdoor cooking products also include smokers and replacement
parts for grills and various accessories such as cooking utensils, grill
cleaning products and barbecue tools. Almost all of the

Company's grills are manufactured at the Company's United States facility. The
Company sources substantially all of its accessories and a portion of its
replacement parts from various manufacturers, many of which are in the Far East.
In 1997, sales of gas grills accounted for approximately 13% of consolidated net
sales.

POWERMATE. The Company's principal Powermate products include portable
generators and portable and stationary air compressors. The Company is a leading
manufacturer and distributor of portable generators in the United States.
Generators are used for home improvement projects, small businesses, emergency
preparedness and outdoor recreation. In January 2000, the Company began selling
a line of home standby generators, which are designed to automatically start
when there is a power outage and provide a portion of a home's electricity
requirements. These products are manufactured by the Company at its United
States facilities using engines manufactured by third parties and are
distributed predominantly through mass merchandisers and home center chains and
through heating, ventilation and air conditioning ("HVAC") distributors. The
Company also produces advanced, lightweight generators incorporating proprietary
technology. The Company's air compressors are manufactured at its facilities
located in the United States, are marketed under the Coleman Powermate brand
name and distributed predominantly through mass merchandisers and home center
chains. In 1999, sales of generators accounted for approximately 10% of
consolidated net sales.

The Company has entered into a strategic alliance with Ballard Power Systems,
Inc., ("Ballard") a leading developer of fuel cell technology for the
development of a line of portable generators incorporating Ballard's fuel cell
technology. This technology generates power without an internal combustion
engine, and without emitting carbon monoxide. There can be no assurance that the
Company will be able to develop a generator powered by fuel cells, and if so
developed, there can be no assurance regarding the financial, commercial and/or
marketing success of such a product.

EASTPAK. The Company designs, manufactures and distributes book bags, backpacks
and related goods throughout the United States under the Eastpak and
Timberland(R) brand names. The Company manufactures the majority of its products
in its plants located in Puerto Rico. On November 9, 1999, the Company announced
a plan to divest Eastpak. In March 2000, the Company entered into the Eastpak
Sale Agreement. See Item 7 - "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Note 11 of Notes to Consolidated
Financial Statements.

INTERNATIONAL

The Company markets a variety of products outside the United States. While the
Company sells many of the same products domestically and internationally, it
also sells products designed specifically to appeal to foreign markets. The
Company, through its foreign subsidiaries, has manufacturing facilities in
France, Indonesia, Italy, Mexico, and Venezuela, and sales administration
offices, warehouse and distribution facilities in Canada, Europe, the Middle
East, Asia and Latin America. The Company also sells its products directly to
international customers in certain other markets through the Company's sales
managers, independent distributors and commissioned sales representatives. The
products sold by the international group are sourced from the Company's
manufacturing operations or from vendors primarily located in Asia.
International sales accounted for approximately 24%, 23%, and 21% of the
Company's consolidated net sales in 1999, 1998 and 1997, respectively. The
Company's international operations are managed through the following geographic
areas:

EUROPE. The Company's European operations are managed from Lyon, France and the
sales are predominately the Campingaz Coleman product lines acquired by the
Company as part of the Coleman acquisition, including the Campingaz product
lines and Eastpak products. The Campingaz product lines are similar to the
outdoor recreation products sold under the Coleman brand name. The Company's
European office also manages the sale and distribution of Company products
throughout Africa and the Middle East.

LATIN AMERICA. The Company enjoys a strong market position in a number of
product lines in Latin America. The Oster brand has the leading market share in
small appliances in a number of Latin American countries, particularly
Venezuela. The Company's sales in Latin America are derived primarily from
household appliances, particularly the Oster blender and the Oster arepa maker.

JAPAN. The Company's sales in Japan consist almost exclusively of sales of
camping equipment such as tents, stoves, lanterns, sleeping bags and
accessories.

CANADA. The Company sells substantially all of its products in Canada through a
distribution sales office located in Toronto.

EAST ASIA. During 1999, the Company's sales in East Asia were hampered by the
economic downturn particularly in South Korea where the Company had developed a
strong market for Eastpak bags, and in Indonesia where the company sells
Campingaz products. The Company has established a sales office in Australia,
from which it sells primarily clippers and appliances, and distributes First
Alert products in Australia and New Zealand. Sales offices have also been
established in the Philippines and Hong Kong.

The Company has sales and facilities in countries where economic growth has
slowed, primarily Japan, Korea and Latin America. The economies of other foreign
countries important to the Company's operations could also suffer instability in
the future. The following

are among the factors that could negatively affect the Company's operations in
foreign markets: (1) access to markets; (2) currency devaluation; (3) new
tariffs; (4) changes in monetary and/or tax policies; (5) inflation; and (6)
governmental instability. See Item 7--"Management's Discussion and Analysis of
Financial Condition and Results of Operations--Foreign Operations
and--Cautionary Statements."

CORPORATE

RETAIL. The Company sells many of its products through its retail outlet stores
which are operated under the Sunbeam, Oster and Camp Coleman(R) names. As of
December 31, 1999, the Company had 39 retail outlet stores in the United States
and Canada which primarily carry discontinued, overstock and refurbished
products for retail sale to consumers. During 1999, the Company closed several
of its underperforming Sunbeam retail stores. Net sales from retail stores were
not significant in any of the last three fiscal years.

LICENSING. The Company licenses the Sunbeam and/or Coleman names and logos under
two types of licensing arrangements: general merchandise licenses and licenses
to purchasers of businesses divested by the Company. The Company's general
merchandise licensing activities involve licensing the Sunbeam and/or Coleman
name and logo, for a royalty fee, to certain companies that manufacture and sell
products that complement the Company's product lines. Revenue from licensing
activities is generated primarily from the license of the Coleman name. In
addition, the Company licenses tradenames, patents and other intellectual
property rights from third parties for use in connection with the Company's
products. Revenue from licensing activities were not significant in any of the
last three fiscal years.

THALIA PRODUCTS, INC. The Company, through its Thalia subsidiary, is developing
HLT, which is designed to allow products to communicate with each other. In
January 2000, Thalia and Sunbeam introduced a line of prototype products
utilizing HLT. The Company intends to have these products in production by the
first quarter of 2001. The Company intends to seek external financing to fund
the production of these products and their ultimate market introduction. The
Company intends to finance Thalia's operations until such financing is obtained.
Such financing is evidenced by an intercompany note between Thalia and the
Company. There can be no assurance that Thalia will be able to secure external
financing and produce products utilizing HLT technology. There also can be no
assurance regarding the financial, commercial and/or marketing success of such
products.

COMPETITION

The markets in which the Company operates are generally highly competitive,
based primarily on product quality, product innovation, price and customer
service and support, although the degree and nature of such competition vary by
location and product line. The Company believes that no other competitor
produces and markets the breadth of household appliance, camping and outdoor
recreation products marketed by the Company.

The Company competes with various manufacturers and distributors with respect to
its household appliances. Primary competitors in the kitchen appliance area have
been Windmere Durable (which sells products under various brand names, including
Black & Decker), Hamilton Beach/Procter Silex, West Bend, Melita, Salton-Maxim,
Cuisinart, Regal, Krups, Kitchen Aid, Braun and Rival. The Company's primary
competitor in the consumer scale market is Metro Corporation. The Company
competes with Micro General with respect to its Pelouze scales. The Company's
health care products primarily compete with those of numerous small
manufacturers and distributors, none of which dominates the home health care
market. The Company has one primary competitor for its electric blankets and
heated throws. The primary competitors in the professional products lines are
Wahl and Andis. The Company enjoys a leading market share with respect to its
smoke and carbon monoxide detectors where Maple Chase, American Sensor, and
Nighthawk are the primary competitors.

The Company's Outdoor Leisure products compete with numerous products sold by
other manufacturers. Lanterns and stoves compete with, among others, products
offered by Century Primus, American Camper and Dayton Hudson Corporation, while
Desa & Schau and Mr. Heater are the primary competitors for heaters. The primary
competitors for the Company's portable furniture are a variety of import
companies. The Company's insulated cooler and jug products compete with products
offered by Rubbermaid Incorporated, Igloo Products Corp. and The Thermos
Company. The Company's sleeping bags compete with, among others, American
Recreation, Slumberjack, Academy Broadway Corp. and MZH Inc, as well as certain
private label manufacturers. In the tent market, the Company competes with,
among others, Wenzel, Eureka and Mountain Safety Research, as well as certain
private label manufacturers. The Company competes with W.C. Bradley, Meco,
Fiesta, Ducane, Weber and Keanall for sales of outdoor grills and accessories.
The Company's Eastpak branded backpack products compete with, among others,
JanSport, Nike, Outdoor Products and The North Face, as well as certain private
label manufacturers. The Company's competition in the electric light business
includes, among others, Eveready and Rayovac Corporation. The Company's camping
accessories compete primarily with Coughlan's. The Company's primary competitors
in the generator business are Generac Corporation, Honda Motor Co., Ltd.,
Kawasaki and Yamaha. Primary competitors in the air compressor business include
DeVilbiss and Campbell Hausfield. In addition, the Company competes with various
other entities in international markets.

CUSTOMERS

The Company markets its products through virtually every category of retailer,
including mass merchandisers, catalog showrooms, warehouse clubs, department
stores, catalogs, Company-owned outlet stores, television shopping channels,
hardware stores, home improvement centers, office products centers, drug and
grocery stores, and pet supply retailers, as well as independent distributors
and military post exchange outlets. In 1999, the Company sold products to
virtually all of the top 100 U.S. retailers, including Wal-Mart/Sam's Club,
Kmart, Mernard's, Target Stores and Home Depot. Sunbeam's largest customer,
Wal-Mart, accounted for approximately 19%, 18%, and 20% of consolidated net
sales in 1999, 1998 and 1997, respectively. The Company has substantially all of
its U.S. customer sales on electronic data interchange (EDI) systems.

BACKLOG

The amount of backlog orders at any point in time is not a significant factor in
the Company's business.

PATENTS AND TRADEMARKS

The Company believes that an integral part of its strength is its ability to
capitalize on the Sunbeam(R), Coleman(R), Oster(R), Eastpak(R), Mr. Coffee(R),
Health o Meter(R), HLT(R), First Alert(R) and Campingaz(R) trademarks which are
registered in the United States and in numerous foreign countries. Widely
recognized throughout North America, Latin America and Europe, these registered
trademarks, along with Powermate(R), Pelouze(R), Peak One(R), Osterizer(R),
Mixmaster(R), Toast Logic(R), Steammaster(R), Oskar(R), Grillmaster(R) and
"Blanket with a Brain(R)" brands are important tO the success of the Company's
products. Other important trademarks within Sunbeam include Oster Designer(R),
Cuddle-Up(R) and A5(R). The loss of the Sunbeam and/or Coleman trademarks could,
but the loss of any other single trademark would likely not, have a material
adverse effect on the Company's business taken as a whole. The Company
aggressively monitors and protects its brands against infringement and other
violations.

The Company holds numerous design and utility patents covering a wide variety of
products, the loss of any one of which would likely not have a material adverse
effect on the Company's business taken as a whole.

RESEARCH AND DEVELOPMENT

New products and improvements to existing products are developed based upon the
perceived needs and demands of consumers. Research and development expenditures
are expensed as incurred. The amounts charged to operations for fiscal years
1999, 1998 and 1997 were $26.8 million, $18.7 million, and $5.7 million,
respectively.

EMPLOYEES

As of December 31, 1999, the Company had approximately 12,200 full-time and
part-time employees of which approximately 7,900 were employed domestically. The
Company is a party to collective bargaining agreements with its hourly employees
located at the Aurora, Illinois, Glenwillow, Ohio and Bridgeview, Illinois
plants. The Company's Canadian warehouse employees are represented by a union,
as are all of the production employees at the Company's operations in France and
Italy. The Company has had no material labor-related work stoppages and, in the
opinion of management, relations with its employees are generally good.

In March 2000, the Company announced that it intends to shut down operations at
its Glenwillow facility. The Glenwillow facility is expected to be closed by the
end of the second quarter of 2000 and will result in the elimination of
approximately 300 positions.

SEASONALITY

The Company's consolidated sales are not expected to exhibit substantial
seasonality; however, sales are expected to be strongest during the second
quarter of the calendar year and weakest in the first quarter. Furthermore,
sales of a number of products, including warming blankets, vaporizers,
humidifiers, grills, First Alert products, camping and generator products, may
be impacted by unseasonable weather conditions.

RAW MATERIALS/SUPPLIERS

The raw materials used in the manufacture of the Company's products are
available from numerous suppliers in quantities sufficient to meet normal
requirements. The Company's primary raw materials include aluminum, steel,
plastic resin, copper, electrical components, various textiles or fabrics and
corrugated cardboard for cartons. The Company also purchases a substantial
number of finished products. The Company is not dependent upon any single
supplier for a material amount of such sourced products.

REGULATORY MATTERS

The Company is subject to various laws and regulations in connection with its
business operations, including laws relating to relations with employees,
maintenance of safe manufacturing facilities, truth in packaging and
advertising, regulation of medical products and safety of consumer products. The
Company does not anticipate that its business or operations will be materially
adversely affected by compliance with any of these provisions. See Item 3 --
"Legal Proceedings".

SIGNIFICANT 1998 FINANCIAL AND BUSINESS DEVELOPMENTS

THE 1998 ACQUISITIONS

On March 2, 1998, the Company announced that it had entered into separate
agreements to acquire Coleman, Signature Brands and First Alert.

Coleman is a leading manufacturer and marketer of outdoor recreational products.
It manufactures and distributes widely diversified product lines for camping,
leisure time and hardware markets, under the Coleman(R), Powermate(R),
Campingaz(R) and Eastpak(R) brand names. On March 30, 1998, pursuant to a merger
agreement dated as of February 27, 1998, the Company acquired approximately 81%
of the then outstanding shares of Coleman common stock from an affiliate of
MacAndrews & Forbes Holdings Inc. ("M&F"), in exchange for 14,099,749 shares of
the Company's common stock and approximately $160 million in cash. In addition,
the Company also assumed approximately $1,016 million in debt of Coleman and its
parent corporations. Immediately after the acquisition, as a result of the
exercise of Coleman employee stock options, the Company's ownership of Coleman
decreased to about 79% of the outstanding shares of Coleman common stock.

In January 2000, pursuant to a merger agreement dated as of February 27, 1998,
the Company acquired the remaining publicly held Coleman shares pursuant to a
merger transaction which provided that the remaining Coleman stockholders (other
than stockholders who are seeking appraisal rights under Delaware law) receive
0.5677 of a share of the Company's common stock and $6.44 in cash for each share
of Coleman common stock they owned, aggregating approximately 6.7 million shares
of the Company's common stock and $87 million in cash. The approximate $87
million aggregate cash payment included $4.8 million related to the cash out of
remaining Coleman employee options, in accordance with the merger agreement,
which occurred in December 1999. In addition, pursuant to a court approved
settlement of claims by Coleman public stockholders the Company issued to such
stockholders (other than such stockholders who are seeking appraisal rights
under Delaware law), warrants expiring August 24, 2003 to purchase 4.98 million
shares of the Company's common stock at $7.00 per share less approximately
498,000 warrants issued to the plaintiffs' attorneys for their fees and
expenses. These warrants, which generally have the same terms as the warrants
previously issued to M&F's subsidiary were issued when the consideration was
paid for the Coleman merger. The total consideration given for the purchase of
the remaining publicly held Coleman shares was valued at $146 million.

On April 3, 1998, the Company acquired more than 90% of the stock of each of
Signature Brands and First Alert in cash tender offers. On April 6, 1998, the
Company acquired the remaining shares of each of Signature Brands and First
Alert in merger transactions. Signature Brands is a leading manufacturer of a
comprehensive line of consumer and professional products, including coffee
makers marketed under the Mr. Coffee(R) brand name and consumer health products
marketed under the Health o Meter(R), Counselor(R) and Borg(R) brand names.
First Alert is the worldwide leader in residential safety equipment, including
smoke and carbon monoxide detectors marketed under the First Alert(R) brand
name. The Company paid about $255 million in cash, including the paying down of
debt, to acquire Signature Brands. The Company paid about $133 million in cash
and assumed about $49 million in debt, a total consideration of about $182
million to acquire First Alert.

During the fourth quarter of 1998, as a result of the significant losses
incurred by First Alert, as well as its future prospects, the Company determined
that the goodwill relating to the First Alert acquisition was impaired and,
based on the determination of fair value, wrote off the net carrying value of
goodwill of approximately $62.5 million. This one-time charge is reflected in
Selling, General & Administrative ("SG&A") expense in the 1998 Consolidated
Statements of Operations.

For additional information, see Notes 2 and 15 of Notes to Consolidated
Financial Statements.

ISSUANCE OF ZERO COUPON CONVERTIBLE DEBENTURES AND NEW BANK CREDIT FACILITY

In order to finance the acquisitions of Coleman, Signature Brands and First
Alert and to repay substantially all of the outstanding indebtedness of the
Company and the three acquired companies, the Company (i) completed an offering
of Zero Coupon Convertible Senior Subordinated Debentures due 2018 (the
"Debentures") at a yield to maturity of 5% (or approximately $2,014 million
principal amount at maturity) on March 25, 1998, which resulted in approximately
$730 million of net proceeds to the Company, and (ii) borrowed approximately
$1,325 million under a new bank credit facility (as amended, the "Credit
Facility"). For information

regarding the Debentures and the Credit Facility, see Item 7--"Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

MANAGEMENT AND BOARD CHANGES

On June 15, 1998, the Company's board of directors removed Albert J. Dunlap as
the Company's Chairman and Chief Executive Officer. Three days later, the
Company terminated Russell A. Kersh as the Company's Vice Chairman and Chief
Financial Officer. On June 15, 1998, the Company's board elected Peter A.
Langerman as its non-executive Chairman of the board and Jerry W. Levin as its
new Chief Executive Officer. Mr. Langerman, an outside director of Sunbeam since
1990, is President and Chief Executive Officer of Franklin Mutual Advisers,
Inc., the investment adviser to Franklin Mutual Series Fund, Inc., which owns
about 16% of the Company's outstanding common stock. Mr. Levin was Chairman and
Chief Executive Officer of Coleman at the time the Company acquired its
controlling interest in Coleman, and previously was the Chairman and Chief
Executive Officer of Revlon, Inc., an affiliate of M&F.

In June 1998 Mr. Levin, Howard Gittis of M&F, and Lawrence Sondike of Franklin
Mutual Advisers, Inc. were elected to the Company's board. William T. Rutter
resigned from the board effective July 8, 1998, and Faith Whittlesey was elected
to fill the vacancy on the audit committee resulting from Mr. Rutter's
resignation. Messrs. Dunlap and Kersh resigned from the board effective August
5, 1998. In January 1999, Mr. Sondike resigned from the board and in February
1999, John H. Klein of Bi-Logix, Inc. was elected as a director. In March 1999,
Mr. Levin became Chairman of the board of directors, succeeding Mr. Langerman.
See Item 4--"Executive Officers of the Registrant."

RESTATEMENT OF FINANCIAL RESULTS; CHANGE OF AUDITORS

On June 25, 1998, the Company announced that its then independent auditors,
Arthur Andersen LLP, ("Arthur Andersen") would not consent to the inclusion of
their opinion on the Company's 1997 financial statements in a registration
statement that the Company was planning to file with the Securities and Exchange
Commission ("SEC"). On June 30, 1998, the Company announced that the audit
committee of its board of directors would review the accuracy of the Company's
prior financial statements and, therefore, those financial statements should not
be relied upon. The Company announced that Deloitte & Touche LLP ("Deloitte &
Touche") had been retained to assist the audit committee and Arthur Andersen in
this review. On August 6, 1998, the Company announced that the audit committee
had determined that the Company would be required to restate its financial
statements for 1997, the first quarter of 1998, and possibly 1996, and that the
adjustments, while not then quantified, would be material.

On October 20, 1998, the Company announced the restatement of its financial
results for a six-quarter period from the fourth quarter of 1996 through the
first quarter of 1998. The Company had to restate these financial results
because the previously issued financial statements generally overstated losses
for 1996, overstated profits for 1997 and understated losses for the first
quarter of 1998. The audit committee concluded that the Company had incorrectly
recognized revenue during these periods from "bill and hold" and guaranteed
sales transactions. The audit committee also concluded that some costs and
allowances for sales returns, co-op advertising, customer deductions and
reserves for product liability and warranty expense were not accrued or were
incorrectly recorded. Finally, the audit committee concluded that various costs
were incorrectly included in and charged to restructuring, asset impairment and
other costs.

On November 20, 1998, the Company announced that its audit committee had
recommended, and the board of directors had approved, the appointment of
Deloitte & Touche to replace Arthur Andersen as the Company's independent
auditors for fiscal year 1998.

SECURITIES AND EXCHANGE COMMISSION INVESTIGATION

The staff of the Division of Enforcement of the SEC advised the Company in a
letter dated June 17, 1998 that it was conducting an informal inquiry into the
Company's accounting policies and procedures. On July 2, 1998, the SEC informed
the Company that the SEC was commencing a formal investigation of the Company.
The order indicates that the SEC is investigating whether the Company, certain
of its current or former officers, directors, employees and certain other
persons and entities violated the federal securities laws and regulations by

/bullet/ filing or causing to be filed inaccurate reports with the SEC,

/bullet/ failing to maintain accurate books, records and accounts,

/bullet/ failing to create or maintain adequate internal accounting
controls, or circumventing such controls,

/bullet/ knowingly or recklessly making false or misleading statements
in reports filed with the SEC or in other public statements,
or

/bullet/ making false or misleading statements to an accountant in
connection with audits or examinations of the Company's
financial statements or reports filed with the SEC.

At the time the formal order of investigation was issued, the SEC also
subpoenaed various documents from the Company. On November 4, 1998, the Company
received another SEC subpoena requiring the production of additional documents.
The Company has cooperated with the SEC and has furnished the SEC with documents
they requested. The Company has, however, declined to provide the SEC with
material that the Company believes is subject to the attorney-client privilege
and the work product immunity. The Company cannot predict how long the SEC
investigation will continue or its outcome.

SETTLEMENT OF COLEMAN-RELATED CLAIMS

On August 12, 1998, the Company announced that, following investigation and
negotiation conducted by a special committee of the Company's board, consisting
of four outside directors not affiliated with M&F, the Company had entered into
a settlement agreement with a subsidiary of M&F pursuant to which the Company
was released from certain threatened claims of M&F and its subsidiaries arising
from the Coleman acquisition and M&F agreed to provide certain management
personnel and assistance to the Company in exchange for the issuance to the M&F
subsidiary of a warrant expiring August 24, 2003 to purchase up to 23 million
shares of the Company's common stock at an exercise price of $7.00 per share,
subject to anti-dilution provisions.

On October 21, 1998, the Company announced that it had entered into a Memorandum
of Understanding to settle, subject to court approval, certain class actions
brought by public stockholders of Coleman challenging the Coleman merger. The
court approved such settlement in November 1999. Under the terms of the
settlement, the Company issued to the Coleman public stockholders warrants
expiring August 24, 2003 to purchase 4.98 million shares of the Company's common
stock at $7.00 per share less approximately 498,000 warrants issued to
plaintiffs' attorneys for their fees and expenses. These warrants generally have
the same terms as the warrants previously issued to M&F's subsidiary.

OPTIONS EXCHANGE

In August 1998, the Company approved an exchange plan for outstanding options to
purchase shares of the Company's common stock held by the Company's employees.
The exchange plan, which has been completed, provided for the outstanding
options with exercise prices in excess of $10.00 per share to be valued by
reference to the generally accepted Black-Scholes option pricing model, and
permitted the Company's employees to exchange old options for new options having
an exercise price of $7 per share and a value equivalent to 75% of the value of
the old options. See Note 9 of Notes to Consolidated Financial Statements.

MATTERS INVOLVING FORMER MANAGEMENT

In early August 1998, the Company entered into a six-month agreement with
Messrs. Dunlap and Kersh in which all parties agreed not to assert claims
against each other and to exchange information relating to the pending
stockholder lawsuits. The Company also agreed to pay a portion of the accrued
vacation and employment benefits of Messrs. Dunlap and Kersh.

After the agreement expired, by letters dated February 9, 1999, Messrs. Dunlap
and Kersh submitted demands for arbitration to the American Arbitration
Association each alleging that the Company terminated his employment without
cause. Messrs. Dunlap and Kersh are seeking lump sum payments of about
$5,250,000 and $2,296,875, respectively. Messrs. Dunlap and Kersh also are
seeking:

/bullet/ amounts for accrued but unused vacation;

/bullet/ amounts in respect of certain benefit plans;

/bullet/ a ruling that their options to acquire shares of the Company's
common stock are fully vested and that they will receive the
economic equivalent of their participation in the Company's
program for repricing of options as described above; and

/bullet/ in the case of Mr. Kersh, more than $3 million, including tax
gross-ups, with respect to his restricted stock.

The Company is vigorously contesting the claims of Messrs. Dunlap and Kersh. To
date, the Company has not made any severance payments to either of Messrs.
Dunlap or Kersh. See Item 3--"Legal Proceedings."

ITEM 2. PROPERTIES

The Company's principal properties as of December 31, 1999 are as follows:

SQUARE OWNED/
BUILDING LOCATION PRINCIPAL USE FOOTAGE LEASED

United States
Aurora, IL First Alert offices, manufacture of fire extinguishers......... 236,000 Leased
Boca Raton, FL Corporate headquarters......................................... 100,626 Leased
Bridgeview, IL Offices and manufacture of scales.............................. 157,000 Owned
Glenwillow, OH Manufacture of Mr. Coffee products, distribution warehouse
and offices.................................................. 458,000 Leased(2)
Hattiesburg, MS Manufacture of molded plastic parts, humidifiers, vaporizers,
warehouse/distribution, and offices.......................... 725,000 Owned
Haverhill, MA Office and warehouse/distribution.............................. 111,750 Leased
Kearney, NE Manufacture/assembly of portable generators; office and
warehouse.................................................... 155,460 Leased(1)
Lake City, SC Manufacture of sleeping bags................................... 165,000 Owned
Maize, KS Manufacture of propane cylinders and machined parts............ 116,000 Leased
McMinnville, TN Manufacture of clippers, trimmers and blades................... 169,400 Leased
Neosho, MO Manufacture of outdoor barbecue grills......................... 1,876,000 Owned
New Braunfels, TX Manufacture of insulated coolers and other plastic
products..................................................... 337,000 Owned
Pocola, OK Manufacture of outdoor folding furniture and
warehouse.................................................... 186,000 Owned
Springfield, MN Manufacture of air compressors................................. 175,000 Owned
Waynesboro, MS Manufacture of electric blankets............................... 893,714 Leased
Wichita, KS Manufacture of lanterns and stoves and insulated coolers and
jugs; research and development and design operations;
office and warehouse......................................... 1,197,000 Owned
Morovis and Orocovis, Manufacture of daypacks, sports bags, and related products;
Puerto Rico office and warehouse......................................... 110,000 Leased

International
Acuna, Mexico Manufacture of appliances...................................... 110,000 Owned
Barquisimeto, Venezuela Manufacture of appliances...................................... 75,686 Owned
Centenaro di Lonato, Italy Manufacture of butane lanterns, stoves, heaters and grills;
office and warehouse......................................... 77,000 Owned
Juarez, Mexico Manufacture of smoke and carbon monoxide detectors............. 109,000 Leased
Matamoros, Mexico Manufacture of controls........................................ 91,542 Owned
Mississauga, Canada Sales and distribution office.................................. 19,891 Leased
St. Genis Laval, France Manufacture of lanterns and stoves, filling of gas cylinders,
and assembly of grills; office and warehouse.................. 2,070,000 Owned(3)

(1) The owned facilities at Kearney, Nebraska reside on land leased under three
leases that expire in 2007 with options to extend each for three additional
ten-year periods.

(2) In March 2000, the Company announced that it intends to shut down this
facility by the end of the second quarter of 2000.

(3) The warehouse portion of St. Genis Laval, France is leased for terms that
expire in 2004; the remaining facility is owned.

The Company also maintains leased sales and administrative offices in the United
States, Europe, Asia and Latin America, among other sites. The Company leases
various warehouse facilities and/or accesses public warehouse facilities as
needed on a short-term lease basis. The Company maintains gas filling plants in
Indonesia, St. Genis Laval France and the United Kingdom. The Company also
leases a total of 178,937 square feet for the operation of its retail outlet
stores. Company management considers the Company's facilities to be suitable for
the Company's operations, and believes that the Company's facilities provide
sufficient capacity for its production requirements.

ITEM 3. LEGAL PROCEEDINGS

LITIGATION

On April 23, 1998, two class action lawsuits were filed on behalf of purchasers
of the Company's common stock in the U.S. District Court for the Southern
District of Florida against the Company and some of its present and former
directors and former officers alleging violations of the federal securities laws
as discussed below. After that date, approximately fifteen similar class actions
were filed in the same Court. One of the lawsuits also named as defendant Arthur
Andersen, the Company's independent accountants for the period covered by the
lawsuit.

On June 16, 1998, the court entered an order consolidating all these suits and
all similar class actions subsequently filed (collectively, the "Consolidated
Federal Actions"). On January 6, 1999, plaintiffs filed a consolidated amended
class action complaint against the Company, some of its present and former
directors and former officers, and Arthur Andersen. The consolidated amended
class action complaint alleges, among other things, that defendants made
material misrepresentations and omissions regarding the Company's business
operations and future prospects in an effort to artificially inflate the price
of the Company's common stock and call options, and that, in violation of
section 20(a) of the Exchange Act, the individual defendants exercised influence
and control over the Company, causing the Company to make material
misrepresentations and omissions. The consolidated amended complaint seeks an
unspecified award of money damages. In February 1999, plaintiffs moved for an
order certifying a class consisting of all persons and entities who purchased
the Company's common stock or who purchased call options or sold put options
with respect to the Company's common stock during the period April 23, 1997
through June 30, 1998, excluding the defendants, their affiliates, and employees
of the Company. Defendants have opposed that motion. In March 1999, all
defendants who had been served with the consolidated amended class action
complaint moved to dismiss it and the court granted the motion only as to
certain non-employee current and former directors and a former officer, and
denied it as to the other defendants. Arthur Andersen has filed counterclaims
against the Company, and a third-party complaint against a director of the
Company and against unnamed third party corporations.

On April 7, 1998, a purported derivative action was filed in the Circuit Court
for the Fifteenth Judicial Circuit in and for Palm Beach County, Florida against
the Company and some of its present and former directors and former officers.
The action alleged that the individual defendants breached their fiduciary
duties and wasted corporate assets when the Company granted stock options in
February 1998 to three of its now former officers and directors. In June 1998,
all defendants filed a motion to dismiss the complaint for failure to make a
pre-suit demand on the Company's board of directors. In February 1999,
plaintiffs filed an amended derivative complaint nominally on behalf of the
Company against some of its present and former directors and former officers and
Arthur Andersen. This amended complaint alleges, among other things, that
Messrs. Dunlap and Kersh, the Company's former Chairman and Chief Executive
Officer and former Chief Financial Officer, respectively, caused the Company to
employ fraudulent accounting procedures in order to enable them to secure new
employment contracts, and seeks a declaration that the individual defendants
have violated fiduciary duties, an injunction against the payment of
compensation to Messrs. Dunlap and Kersh or the imposition of a constructive
trust on such payments, and unspecified money damages. The defendants have each
moved to dismiss the amended complaint in whole or in part.

During 1998, purported class action and derivative lawsuits were filed in the
Court of Chancery of the State of Delaware in New Castle County and in the U.S.
District Court for the Southern District of Florida by stockholders of the
Company against the Company, MacAndrews & Forbes and some of the Company's
present and former directors. These complaints allege, among other things, that
the defendants breached their fiduciary duties when the Company entered into a
settlement agreement with the MacAndrews & Forbes subsidiary that sold the
Company a controlling interest in Coleman. In such settlement agreement, the
MacAndrews & Forbes subsidiary released the Company from threatened claims
arising out of the Company's acquisition of its interest in Coleman, and
MacAndrews & Forbes agreed to provide management support to the Company. Under
the settlement agreement, the MacAndrews & Forbes subsidiary was granted a
warrant expiring August 24, 2003 to purchase up to an additional 23 million
shares of the Company's common stock at an exercise price of $7 per share,
subject to anti-dilution provisions. The derivative actions filed in the
Delaware Court of Chancery were consolidated. The plaintiffs voluntarily
dismissed the action in the Delaware Chancery Court. The action filed in the
U.S. District Court for the Southern District of Florida has been dismissed. In
April 2000, a complaint was filed in the U.S. District Court for the Southern
District of Florida against the Company, certain current and former directors,
Messrs. Dunlap and Kersh and MacAndrews & Forbes alleging, among other things,
that certain of the defendants breached their fiduciary duty when the Company
entered into a settlement agreement with MacAndrews & Forbes and certain of the
defendants breached their fiduciary duty and wasted corporate assets by, among
other things, issuing materially false and misleading statements regarding the
Company's financial condition. The plaintiff in this action seeks, among other
things, recession of the warrants issued to MacAndrews & Forbes and an
injunction preventing the issuance of such warrant and damages.

In September 1998, an action was filed in the 56th Judicial District Court of
Galveston County, Texas alleging various claims in violation of the Texas
Securities Act and Texas Business & Commercial Code as well as common law fraud
as a result of the Company's alleged misstatements and omissions regarding the
Company's financial condition and prospects during a period beginning May 1,
1998 and ending June 16, 1998, in which the U.S. National Bank of Galveston,
Kempner Capital Management, Inc. and Legacy Trust Company engaged in
transactions in the Company's common stock on their own behalf and on behalf of
their respective clients. The Company is the only named defendant in this
action. The complaint requests recovery of compensatory damages, punitive
damages and expenses in an unspecified amount. This action was subsequently
transferred to the U.S. District Court for the Southern District of Florida and
consolidated with the Consolidated Federal Actions.

In October 1998, a class action lawsuit was filed in the U.S. District Court for
the Southern District of Florida on behalf of certain purchasers of the
debentures against the Company and certain of the Company's former officers and
directors. In April 1999, a class action lawsuit was filed in the U.S. District
Court for the Southern District of Florida on behalf of persons who purchased
debentures during the period of March 20, 1998 through June 30, 1998, inclusive,
but after the initial offering of such debentures against the Company, Arthur
Andersen, the Company's former auditor, and certain former officers and
directors. The court consolidated the two cases and the plaintiffs have filed a
consolidated class action on behalf of persons who purchased debentures in the
initial offering and in the market during the period March 20, 1998 through June
30, 1998. The amended complaint alleges, among other things, violations of the
federal and state securities laws and common law fraud. The plaintiffs seek,
among other things, either unspecified monetary damages or rescission of their
purchase of the debentures. This action is coordinated with the Consolidated
Federal Actions.

The Company has been named as a defendant in an action filed in the District
Court of Tarrant County, Texas, 48th Judicial District, on November 20, 1998.
The plaintiffs in this action are purchasers of the debentures. The plaintiffs
allege that the Company violated the Texas Securities Act and the Texas Business
& Commercial Code and committed state common law fraud by materially misstating
the financial position of the Company in connection with the offering and sale
of the debentures. The complaint seeks rescission, as well as compensatory and
exemplary damages in an unspecified amount. The Company specially appeared to
assert an objection to the Texas court's exercise of personal jurisdiction over
the Company, and a hearing on this objection took place in April 1999. Following
the hearing, the court entered an order granting the Company's special
appearance and dismissing the case without prejudice. The plaintiffs moved for
reconsideration of the court order, which motion the court denied.

On February 9, 1999, Messrs. Dunlap and Kersh filed with the American
Arbitration Association demands for arbitration of claims under their respective
employment agreements with the Company. Messrs. Dunlap and Kersh are requesting
a finding by the arbitrator that the Company terminated their employment without
cause and that they should be awarded certain benefits based upon their
respective employment agreements. The Company has answered the arbitration
demands of Messrs. Dunlap and Kersh and has filed counterclaims seeking, among
other things, the return of all consideration paid, or to be paid, under the
February 1998 Employment Agreements between the Company and Messrs. Dunlap and
Kersh. An answer was filed by Messrs. Dunlap and Kersh generally denying the
Company's counterclaim. Discovery is pending.

On September 13, 1999, an action naming the Company and Arthur Andersen as
defendants was filed in the Circuit Court for Montgomery County, Alabama. The
plaintiffs in this action are purchasers of the Company's common stock during
the period March 19, 1998 through May 6, 1998. The plaintiffs allege, among
other things, that the defendants violated the Alabama Securities Laws. The
plaintiffs seek compensatory and punitive damages in an unspecified amount.
Arthur Andersen has filed a cross claim against the Company for contribution and
indemnity. The Company has filed a motion to dismiss.

The Company intends to vigorously defend each of the foregoing lawsuits, but
cannot predict the outcome and is not currently able to evaluate the likelihood
of the Company's success in each case or the range of potential loss, if any.
However, if the Company were to lose one or more of these lawsuits, judgments
would likely have a material adverse effect on the Company's consolidated
financial position, results of operations or cash flows.

In July 1998, the American Alliance Insurance Company ("American Alliance")
filed suit against the Company in the U.S. District Court for the Southern
District of New York requesting a declaratory judgment of the court that the
directors' and officers' liability insurance policy for excess coverage issued
by American Alliance was invalid and/or had been properly canceled by American
Alliance. As a result of a motion made by the Company, this case has been
transferred to the U.S. District Court for the Southern District of Florida for
coordination and consolidation of pre-trial proceedings with the various actions
pending in that court. In October 1998, an action was filed by Federal Insurance
Company ("Federal Insurance") in the U.S. District Court for the Middle District
of Florida requesting the same relief as that requested by American Alliance in
the previously filed action as to additional coverage levels under the Company's
directors' and officers' liability insurance policy. This action has been
transferred to the U.S. District Court for the Southern District of Florida.
Discovery in the cases brought by American Alliance and Federal Insurance is
underway and coordinated with the discovery in the Consolidated Federal Actions.
In December 1998, an action was filed by Executive Risk Indemnity, Inc. in the
Circuit Court of the Seventeenth Judicial Circuit in and for Broward County,
Florida requesting the same relief as that requested by American Alliance and
Federal Insurance in their previously filed actions as to additional coverage
levels under the Company's directors' and officers' liability insurance policy.
In April 1999, the Company filed an action in the U.S. District Court for the
Southern District of Florida against National Union Fire Insurance Company of
Pittsburgh, PA, ("National Union"), Gulf Insurance Company ("Gulf"), and St.
Paul Mercury Insurance Company ("St. Paul") requesting, among other things, a
declaratory judgment that National Union is not entitled to rescind its
directors' and officers' liability insurance policies to the Company and a
declaratory judgment that the Company is entitled to coverage from these
insurance companies for the various lawsuits described herein under directors'
and officers' liability insurance policies issued by each of the defendants. The
Company has settled its litigation with National Union. In response to the
Company's complaint, defendants St. Paul and Gulf have answered and asserted
counterclaims seeking rescission and declaratory relief that no coverage is
available to the Company. The Company intends to pursue recovery from all of its
insurers if damages are awarded against the Company or its indemnified officers
and/or directors under any of the foregoing actions and to recover attorneys'
fees covered under those policies. The Company's failure to obtain such
insurance recoveries following an adverse judgment in any of the actions
described above could have a material adverse effect on the Company's financial
position, results of operations or cash flows.

documents to the SEC staff and continues to cooperate with the SEC staff. The
Company has, however, declined to provide the SEC with material that the Company
believes is subject to the attorney-client privilege and the work product
immunity. The SEC has not commenced any civil or administrative proceedings as a
result of its investigation, and the Company cannot predict at this time whether
the SEC will seek to impose any monetary or other penalties against the Company.
Under these circumstances, the Company cannot estimate the duration of the
investigation or its outcome.

The Company and its subsidiaries are also involved in various other lawsuits
arising from time to time which the Company considers to be ordinary routine
litigation incidental to its business. In the opinion of the Company, the
resolution of these routine matters, and of certain matters relating to prior
operations, individually or in the aggregate, will not have a material adverse
effect upon the financial position, results of operations or cash flows of the
Company.

Amounts accrued for litigation matters represent the anticipated costs (damages
and/or settlement amounts) in connection with pending litigation and claims and
related anticipated legal fees for defending such actions. The costs are accrued
when it is both probable that an asset has been impaired or a liability has been
incurred and the amount can be reasonably estimated. The accruals are based upon
the Company's assessment, after consultation with counsel, of probable loss
based on the facts and circumstances of each case, the legal issues involved,
the nature of the claim made, the nature of the damages sought and any relevant
information about the plaintiffs and other significant factors which vary by
case. When it is not possible to estimate a specific expected cost to be
incurred, the Company evaluates the range of probable loss and records the
minimum end of the range. As of December 31, 1999, the Company had established
accruals for litigation matters of $24.3 million (representing $9.6 million and
$14.7 million for estimated damages or settlement amounts and legal fees,
respectively), and $31.2 million as of December 31, 1998 (representing $17.5
million and $13.7 million for estimated damages or settlement amounts and legal
fees, respectively). It is anticipated that the $24.3 million accrual at
December 31, 1999 will be paid as follows: $20.8 million in 2000, $3.4 million
in 2001 and $0.1 million in 2002. The Company believes, based on information
available on December 31, 1999, that anticipated probable costs of litigation
matters existing as of December 31, 1999 have been adequately reserved to the
extent determinable.

PRODUCT LIABILITY MATTERS

As a consumer goods manufacturer and distributor, the Company and/or its
subsidiaries face the constant risks of product liability and related lawsuits
involving claims for substantial money damages, product recall actions and
higher than anticipated rates of warranty returns or other returns of goods.
These claims could result in liabilities that could have a material adverse
effect on the Company's consolidated financial position, results of operations
or cash flows. Some of the product lines the Company acquired in the 1998
acquisitions have increased its exposure to product liability and related
claims.

BRK Brands, Inc. and Sunbeam (Canada Limited) are defendants in an alleged class
action lawsuit in Ontario, Canada that claims, among other things, that the
defendants failed to adequately inform consumers regarding the performance of
smoke detectors utilizing ionization technology. The alleged class action
consists of all consumers in Ontario, Canada who have purchased ionization
detectors manufactured or sold by the defendants or their predecessors. BRK
Brands is also a defendant in two separate alleged class action lawsuits in the
United States, one in the United States District Court for the Northern District
of Alabama and the other in Circuit Court, Twentieth Judicial District, St.
Clair, Illinois (the "U.S. Class Action"). The plaintiffs in the U.S. Class
Action made substantially the same allegations as the plaintiff in the
above-alleged class action in Ontario, Canada. The defendants intend to
vigorously defend this lawsuit, but cannot predict the outcome and is not
currently able to evaluate the likelihood of the defendant's success or the
range of potential loss, if any. However, if the defendants were to lose one of
these lawsuits, it could have a material adverse effect on the defendants'
financial position, results of operations or cash flows.

The Company is party to various personal injury and property damage lawsuits
relating to its products and incidental to its business. Annually, the Company
sets its product liability insurance program which is an occurrence based
program, based on the Company's current and historical claims experience and the
availability and cost of insurance. The Company's program for 1999 was comprised
of a self-insurance retention of $3.5 million per occurrence, and was limited to
$28.0 million in the aggregate.

Cumulative amounts estimated to be payable by the Company with respect to
pending and potential claims for all years in which the Company is liable under
its self-insurance retention have been accrued as liabilities. Such accrued
liabilities are necessarily based on estimates (which include actuarial
determinations made by independent actuarial consultants as to liability
exposure, taking into account prior experience, numbers of claims and other
relevant factors); thus, the Company's ultimate liability may exceed or be less
than the amounts accrued. The methods of making such estimates and establishing
the resulting liability are reviewed on a regular basis and any adjustments
resulting therefrom are reflected in current operating results.

Historically, product liability awards have rarely exceeded the Company's
individual per occurrence self-insured retention. There can be no assurance,
however, that the Company's future product liability experience will be
consistent with its past experience. Based on existing information, the Company
believes that the ultimate conclusion of the various pending product liability
claims and lawsuits of

the Company, individually or in the aggregate, will not have a material adverse
effect on the financial position, results of operations or cash flows of the
Company.

ENVIRONMENTAL MATTERS

The Company's operations, like those of comparable businesses, are subject to
certain federal, state, local and foreign environmental laws and regulations in
addition to laws and regulations regarding labeling and packaging of products
and the sales of products containing certain environmentally sensitive
materials. The Company believes it is in substantial compliance with all
environmental laws and regulations which are applicable to its operations.
Compliance with environmental laws and regulations involves certain continuing
costs; however, such costs of ongoing compliance have not resulted, and are not
anticipated to result, in a material increase in the Company's capital
expenditures or to have a material adverse effect on the Company's competitive
position, results of operations, financial condition or cash flows.

In addition to ongoing environmental compliance at its operations, the Company
also is actively engaged in environmental remediation activities many of which
relate to divested operations. As of December 31, 1999, the Company has been
identified by the United States Environmental Protection Agency ("EPA") or a
state environmental agency as a potentially responsible party ("PRP") in
connection with seven sites subject to the federal Superfund Act and five sites
subject to state Superfund laws comparable to the federal law (collectively the
"Environmental Sites"), exclusive of sites at which the Company has been
designated (or expects to be designated) as a de minimis (less than 1%)
participant.

The Superfund Act, and related state environmental remediation laws, generally
authorize governmental authorities to remediate a Superfund site and to assess
the costs against the PRPs or to order the PRPs to remediate the site at their
expense. Liability under the Superfund Act is joint and several and is imposed
on a strict basis, without regard to degree of negligence or culpability. As a
result, the Company recognizes its responsibility to determine whether other
PRPs at a Superfund site are financially capable of paying their respective
shares of the ultimate cost of remediation of the site. Whenever the Company has
determined that a particular PRP is not financially responsible, it has assumed
for purposes of establishing reserve amounts that such PRP will not pay its
respective share of the costs of remediation. To minimize the Company's
potential liability with respect to the Environmental Sites, the Company has
actively participated in steering committees and other groups of PRPs
established with respect to such sites. The Company currently is engaged in
active remediation activities at thirteen sites, seven of which are among the
Environmental Sites referred to above, and six of which have not been designated
as Superfund sites under federal or state law. The remediation efforts in which
the Company is involved include facility investigations, including soil and
groundwater investigations, corrective measure studies, including feasibility
studies, groundwater monitoring, extraction and treatment and soil sampling,
excavation and treatment relating to environmental clean-ups. In certain
instances, the Company has entered into agreements with governmental authorities
to undertake additional investigatory activities and in other instances has
agreed to implement appropriate remedial actions. The Company has also
established reserve amounts for certain non-compliance matters including those
involving air emissions.

The Company has established reserves to cover the anticipated probable costs of
investigation and remediation, based upon periodic reviews of all sites for
which the Company has, or may have remediation responsibility. The Company
accrues environmental investigation and remediation costs when it is probable
that a liability has been incurred, the amount of the liability can be
reasonably estimated and the Company's responsibility for the liability is
established. Generally, the timing of these accruals coincides with the earlier
of formal commitment to an investigation plan, completion of a feasibility study
or the Company's commitment to a formal plan of action. As of December 31, 1999
and 1998, the Company's environmental reserves were $19.9 million (representing
$18.2 million for the estimated costs of facility investigations, corrective
measure studies, or known remedial measures, and $1.7 million for estimated
legal costs) and $25.0 million (representing $22.9 million for the estimated
costs of facility investigations, corrective measure studies, or known remedial
measures, and $2.1 million for estimated legal costs), respectively. It is
anticipated that the $19.9 million accrual at December 31, 1999 will be paid as
follows: $3.8 million in 2000, $2.9 million in 2001, $2.5 million in 2002, $0.7
million in 2003, $0.6 million in 2004 and $9.4 million thereafter. The Company
has accrued its best estimate of investigation and remediation costs based upon
facts known to the Company at such dates and because of the inherent
difficulties in estimating the ultimate amount of environmental costs, which are
further described below, these estimates may materially change in the future as
a result of the uncertainties described below. Estimated costs, which are based
upon experience with similar sites and technical evaluations, are judgmental in
nature and are recorded at undiscounted amounts without considering the impact
of inflation and are adjusted periodically to reflect changes in applicable laws
or regulations, changes in available technologies and receipt by the Company of
new information. It is difficult to estimate the ultimate level of future
environmental expenditures due to a number of uncertainties surrounding
environmental liabilities. These uncertainties include the applicability of laws
and regulations, changes in environmental remediation requirements, the
enactment of additional regulations, uncertainties surrounding remediation
procedures including the development of new technology, the identification of
new sites for which the Company could be a PRP, information relating to the
exact nature and extent of the contamination at each site and the extent of
required cleanup efforts, the uncertainties with respect to the ultimate outcome
of issues which may be actively contested and the varying costs of alternative
remediation strategies. The Company continues to pursue the recovery of some
environmental remediation costs from certain of its liability

insurance carriers; however, such potential recoveries have not been offset
against potential liabilities and have not been considered in determining the
Company's environmental reserves.

Due to uncertainty over remedial measures to be adopted at some sites, the
possibility of changes in environmental laws and regulations and the fact that
joint and several liability with the right of contribution is possible at
federal and state Superfund sites, the Company's ultimate future liability with
respect to sites at which remediation has not been completed may vary from the
amounts reserved as of December 31, 1999.

The Company believes, based on information available as of December 31, 1999 for
sites where costs are estimable, that the costs of completing environmental
remediation of all sites for which the Company has a remediation responsibility
have been adequately reserved and that the ultimate resolution of these matters
will not have a material adverse effect upon the Company's financial condition,
results of operations or cash flows.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the quarter ended December 31, 1999, there were no matters submitted to a
vote of the Company's security holders.

EXECUTIVE OFFICERS OF THE REGISTRANT

As of March 30, 2000, the executive officers of the Company are as follows:

NAME AGE POSITION

Jerry W. Levin..................... 55 Chairman of the Board,
President, Chief
Executive Officer and
Director
Paul E. Shapiro.................... 58 Executive Vice President
and Chief Administrative
Officer
Bobby G. Jenkins.................... 38 Executive Vice President
and Chief Financial Officer
Steven R. Isko...................... 36 Senior Vice President and
General Counsel
Ronald H. Dunbar.................... 63 Senior Vice President,
Human Resources
Barbara L. Allen.................... 44 Secretary

JERRY W. LEVIN was appointed Chief Executive Officer, President and a director
of Sunbeam in June 1998 and was elected as Chairman of the Sunbeam board of
directors on March 29, 1999. Mr. Levin has served as Chairman of the Board and
Chief Executive Officer of Coleman since August 1998 and as Chief Executive
Officer of Coleman from June 1998 to August 1998. Mr. Levin previously held the
position of Chairman and Chief Executive Officer of Coleman from February 1997
until March 1998. Mr. Levin was also the Chairman of Coleman from 1989 to 1991.
Mr. Levin was Chairman of Revlon, Inc. from November 1995 until June 1998, Chief
Executive Officer of Revlon, Inc. from 1992 until January 1997, and President of
Revlon, Inc. from 1991 to 1995. Mr. Levin has been Executive Vice President of
MacAndrews & Forbes since March 1989. For 15 years prior to joining MacAndrews &
Forbes, Mr. Levin held various senior executive positions with the Pillsbury
Company. Mr. Levin is also a member of the boards of directors of Revlon, Inc.;
Ecolab, Inc.; and U.S. Bancorp.

PAUL E. SHAPIRO joined Sunbeam as Executive Vice President and Chief
Administrative Officer in June 1998. Mr. Shapiro was also appointed Executive
Vice President and Chief Administrative Officer and a director of Coleman in
June 1998. Mr. Shapiro previously held the position of Executive Vice President
and General Counsel of Coleman from July 1997 until March 1998. Before joining
Coleman, he was Executive Vice President, General Counsel and Chief
Administrative Officer of Marvel Entertainment Group, Inc. ("Marvel"). Marvel
and several of its subsidiaries filed voluntary petitions for reorganization
under Chapter 11 of the United States Bankruptcy Code ("Chapter 11") in 1996.
Mr. Shapiro served as an executive officer of Marvel at the time of such filing.
He had previously spent over 25 years in private law practice and as a business
executive, most recently as a shareholder in the law firm of Greenberg Traurig
Hoffman Lipoff Rosen & Quentel. Mr. Shapiro is also a member of the board of
directors of Toll Brothers, Inc.

BOBBY G. JENKINS joined Sunbeam as Executive Vice President and Chief Financial
Officer in June 1998. Mr. Jenkins also serves as Executive Vice President of
Coleman. He was appointed to that position in August 1998. Mr. Jenkins was Chief
Financial Officer of Coleman's Outdoor Recreation division from September 1997
to May 1998. Mr. Jenkins was Executive Vice President and Chief Financial
Officer of Marvel from December 1993 through June 1997. Mr. Jenkins served as an
executive officer of Marvel at the time of the 1996 Chapter 11 filings of Marvel
and several of its subsidiaries. Mr. Jenkins was Assistant Vice President of
Finance at Turner Broadcasting System from August 1992 to November 1993. Prior
to that, Mr. Jenkins was with Price Waterhouse LLP, last serving as Senior Audit
Manager.

STEVEN R. ISKO joined Sunbeam in June 1999 as Senior Vice President and General
Counsel. Mr. Isko also serves as Senior Vice President and General Counsel of
Coleman. From May 1998 to December 1998, Mr. Isko was Senior Vice President,
General Counsel and Secretary of The Cosmetic Center, Inc. From June 1997 to
April 1998, Mr. Isko was Vice President, Legal for Coleman and from June 1996 to
July 1997 was Vice President - Law and Corporate Secretary of Marvel. Prior to
June 1996, Mr. Isko was an associate at the law firm of Skadden, Arps, Slate,
Meagher & Flom LLP in New York, New York.

RONALD H. DUNBAR was appointed Senior Vice President, Human Resources in August
1998. Mr. Dunbar also serves as Senior Vice President, Human Resources of
Coleman. Mr. Dunbar was Senior Vice President, Human Resources of Revlon, Inc.
from 1992 until 1998. Mr. Dunbar was Vice President and General Manager of
Arnold Menn and Associates, a career management consulting and executive
outplacement firm, from 1989 to 1991 and Executive Vice President and Chief
Human Resources Officer of Ryder System, Inc., a highway transportation firm,
from 1978 to 1989. Prior to that, Mr. Dunbar served in senior executive human
resources positions at Xerox Corporation and Ford Motor Company.

BARBARA L. ALLEN joined Sunbeam in June 1999 as Secretary. Ms. Allen has also
served as Secretary of Coleman since June 1999. From April 1998 to June 1999,
Ms. Allen was a consultant to Coleman. From April 1997 to March 1998, Ms. Allen
was Secretary of Coleman. Prior to April 1997, Ms. Allen served in various
capacities at Coleman, including as Assistant Secretary from December 1991 to
April 1997. Ms. Allen's business address is The Coleman Company, Inc., 3600
North Hydraulic Street, P.O. Box 2931, Wichita, Kansas 67201.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

Sunbeam's common stock has been listed for trading on the New York Stock
Exchange under the symbol "SOC" since August 19, 1992. The following table
provides the high and low sales prices of the common stock for the quarters
indicated as reported on the NYSE Composite Transactions Tape.

PRICE RANGE OF DIVIDENDS
COMMON STOCK PER
HIGH LOW COMMON SHARE

Year Ended December 31, 1998
First Quarter........................................................................ $53 $35 7/16 $0.01
Second Quarter....................................................................... 45 9/16 8 3/16 --
Third Quarter........................................................................ 10 3/8 5 1/8 --
Fourth Quarter....................................................................... 7 5/16 4 5/8 --

Year Ending December 31, 1999
First Quarter........................................................................ $7 7/8 $5 1/2 --
Second Quarter....................................................................... 9 1/8 5 1/8 --
Third Quarter........................................................................ 8 5 5/8 --
Fourth Quarter....................................................................... 6 1/4 3 7/8 --

Year Ending December 31, 2000
First Quarter........................................................................ 6 1/16 3 7/8 --
Second Quarter ...................................................................... 4 3/16 2 15/16 --

As of April 25, 2000, there were approximately 4,489 holders of record of shares
of common stock.

Sunbeam stopped paying dividends on its common stock after the first quarter of
1998 and has no intention of paying dividends in the foreseeable future.
Moreover, Sunbeam's Credit Facility, as amended, prohibits the payment of cash
dividends.

RECENT SALES OF UNREGISTERED SECURITIES

Pursuant to their respective employment agreements (the "Employment
Agreements"), the Company granted certain options (the "Options") on August 12,
1998 to Messrs. Levin, Shapiro, Jenkins and Mr. Hall in consideration for
services rendered or to be rendered by these executives. Mr. Hall resigned as
President, International of the Company in April 2000. The grants were made
pursuant to Section 4(2) under the Securities Act of 1933 and, accordingly, were
not registered under federal or state securities law. The following table
specifies the number of shares of common stock underlying these options:

Jerry W. Levin.................................................. 2,750,000
Paul E. Shapiro................................................. 600,000
Bobby G. Jenkins................................................ 450,000
Jack D. Hall.................................................... 400,000

The options above were granted in 1998 and approved by the Company's
stockholders on June 29, 1999. Of these options, 2,750,000 were granted to Mr.
Levin with exercise prices of $14.00 (500,000 options), $10.50 (500,000 options)
and $7.00 (1,750,000 options), which vest in their entirety on June 14, 2001.
Messrs. Shapiro and Jenkins were granted 600,000 options and 450,000 options,
respectively, with an exercise price of $7.00, which vest in their entirety on
June 14, 2001. Mr. Hall was granted 400,000 options, with an exercise price of
$7.00, which vest in their entirety on October 1, 2000.

Effective February 1, 1998, pursuant to their respective employment agreements
with the Company (the "1998 Agreements"), the Company granted certain options
(the "1998 Options") to Messrs. Dunlap and Kersh and to David C. Fannin, each of
whom is a former officer of the Company, in consideration for services rendered
or to be rendered by these former executives. The grants were made pursuant to
Section 4(2) under the Securities Act of 1933 and, accordingly, were not
registered under federal or state securities law. The following table specifies
the number of shares of common stock underlying these options:

Albert J. Dunlap................................................ 3,750,000
Russel A. Kersh................................................. 1,125,000
David C. Fannin................................................. 750,000

The 1998 Options had a term of 10 years and an exercise price of $36.85 per
share. The 1998 Agreement with Mr. Dunlap provided that one-third of Mr.
Dunlap's 1998 options would vest immediately, while the remaining two-thirds
would vest in subsequent years. The 1998 Agreement with Mr. Kersh provided that
one-fourth of Mr. Kersh's 1998 options would vest immediately, while the
remaining three-fourths would vest in subsequent years. All of Mr. Fannin's 1998
Options were canceled pursuant to his termination agreement.

As of February 1, 1998, the Company also granted to Mr. Dunlap 300,000 shares of
unregistered common stock and granted 150,000 and 30,000 shares of restricted
unregistered common stock to Messrs. Kersh and Fannin, respectively. These
shares were granted in consideration for services rendered or to be rendered by
these former executives. The grants were made pursuant to Section 4(2) under the
Securities Act of 1933 and, accordingly, were not registered under federal or
state securities laws.

The 1998 Agreement with Mr. Dunlap provided for immediate vesting of the
restricted common stock granted to him; whereas the 1998 Agreement with Mr.
Kersh provided for the immediate vesting of 37,500 shares of the 150,000
restricted shares of common stock granted to him. Of Mr. Fannin's 30,000
restricted shares, 7,500 were vested and the remainder were forfeited pursuant
to his termination agreement with the Company.

The Company and Messrs. Dunlap and Kersh are currently engaged in disputes with
respect to the obligations of the Company under their respective 1998
Agreements, including the status of the foregoing option and stock grants.
See Item 3--"Legal Proceedings."

On March 25, 1998, the Company sold approximately $2,014 million aggregate
principal amount of Debentures to the sole initial purchaser, Morgan Stanley &
Co. Incorporated, pursuant to Section 4(2) under the Securities Act of 1933. The
Debentures were then resold to qualified institutional buyers in reliance on
Rule 144A under the Securities Act and a limited number of "institutional
accredited investors" as defined in Rule 501(A)(1), (2), (3) or (7) under the
Securities Act. The Company sold the Debentures for $750.0 million, net. The
underwriting discounts and commissions totaled $20.4 million. See Item
7--"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

On March 30, 1998, the Company acquired from an affiliate of M&F indirect
beneficial ownership of 44,067,520 shares of common stock of Coleman, or
approximately 81% (79% after the exercise of certain stock options immediately
after the acquisition) of the then outstanding shares of Coleman common stock,
for 14,099,749 shares of the Company's common stock and approximately $160
million in cash. In addition, the Company assumed approximately $1,016 million
of debt. The Company issued these shares to the M&F affiliate pursuant to
Section 4(2) of the Securities Act. See Item 1--"Significant 1998 Financial and
Business Developments--The 1998 Acquisitions."

On August 12, 1998, the Company announced that it had entered into a settlement
agreement with an affiliate of M&F, pursuant to which the Company was released
from certain threatened claims of M&F and its affiliates arising from the
acquisition of Coleman and M&F agreed to provide certain management personnel
and assistance to the Company in exchange for the issuance to the M&F affiliate
of a warrant expiring August 24, 2003 to purchase up to 23 million shares of the
Company common stock at a cash exercise price of $7 per share, subject to
anti-dilution provisions. The issuance of the warrant was made in accordance
with Section 4(2) of the Securities Act. See Item 1--"Significant 1998 Financial
and Business Developments-Settlement of Coleman-Related Claims."

ITEM 6. SELECTED FINANCIAL DATA

The following is a summary of certain financial information relating to the
Company. This summary should be read in conjunction with the Consolidated
Financial Statements of the Company and the related Notes. All amounts in the
table are expressed in millions, except per share data.

FISCAL YEARS ENDED

DECEMBER 31, DECEMBER 31, DECEMBER 28, DECEMBER 29, DECEMBER 31,
1999 (1) 1998 (2)(3) 1997 (4) 1996 (5) 1995
----------- ----------- ----------- ----------- -----------

Statement of Operations Data:
Net sales $ 2,398.0 $ 1,836.9 $ 1,073.1 $ 984.2 $ 1,016.9
Cost of goods sold 1,793.4 1,781.9 831.0 896.9 809.1
Selling, general and administrative
expense 701.2 725.0 152.6 221.7 137.5
Restructuring and asset impairment
(benefit) charges -- -- (14.6) 110.1 --
----------- ----------- ----------- ----------- -----------
Operating (loss) earnings $ (96.6) $ (670.0) $ 104.1 $ (244.5) $ 70.3
=========== =========== =========== =========== ===========
(Loss) earnings from continuing operations
before extraordinary charge $ (299.5) $ (775.5) $ 52.3 $ (170.2) $ 37.6
Earnings from discontinued operations, net
of taxes (6) -- -- -- 0.8 12.9
Loss on sale of discontinued operations,
net of taxes (6) -- -- (14.0) (39.1) --
Extraordinary charge from early
extinguishments of debt -- (122.4) -- -- --
----------- ----------- ----------- ----------- -----------
Net (loss) earnings $ (299.5) $ (897.9) $ 38.3 $ (208.5) $ 50.5
=========== =========== =========== =========== ===========

Per Share Data:
Weighted average common shares outstanding:
Basic 100.7 97.1 84.9 82.9 81.6
Diluted 100.7 97.1 87.5 82.9 82.8
(Loss) earnings per share from continuing
operations before extraordinary charge:
Basic $ (2.97) $ (7.99) $ 0.62 $ (2.05) $ 0.46
Diluted (2.97) (7.99) 0.60 (2.05) 0.45
Net (loss) earnings per share:
Basic (2.97) (9.25) 0.45 (2.51) 0.62
Diluted (2.97) (9.25) 0.44 (2.51) 0.61
Cash dividends declared per share -- 0.01 0.04 0.04 0.04
Balance Sheet Data (at period end):
Working capital 311.7 488.5 369.1 359.9 411.7
Total assets 3,132.3 3,405.5 1,058.9 1,059.4 1,158.7
Long-term debt, less current portion 2,164.0 2,142.4 194.6 201.1 161.6
Shareholders' (deficiency) equity (59.3) 260.4 472.1 415.0 601.0

(1) Includes an asset impairment charge of $52.0 million, fixed asset and
inventory charges of $15.0 million, and $27.3 million in charges
related to Year 2000 and systems initiatives expenses. Results for the
year also include $26.2 million of other significant and unusual
charges. See discussion in Item 7 - "Management's Discussion and
Analysis of Financial Condition and Result of Operations - Significant
and Unusual Charges".

(2) On March 30, 1998, the Company acquired approximately 81% of the then
outstanding shares of common stock of Coleman. On April 6, 1998, the
Company completed the cash acquisitions of First Alert and Signature
Brands. The acquisitions were accounted for under the purchase method
of accounting and, accordingly, the financial position and results of
operations of each acquired entity is included in the Consolidated
Financial Statements from the applicable date of acquisition.

(3) Includes charges of $70.0 million related to the issuance of warrants,
$62.5 million related to the write-off of goodwill, $122.4 million
related to the early extinguishments of debt, $39.4 million related to
fixed asset impairments, $34.4 million of compensation expense and
severance recorded in connection with new employment agreements with
the Company's former Chairman and Chief Executive Officer and two other
former senior officers, and $95.8 million related to excess and
obsolete inventory reserves, see Notes 2, 3, 8, 11 and 17 of Notes to
the Consolidated Financial Statements.

(Footnotes continued on next page)

(Footnotes continued from previous page)

(4) Includes the reversal of $28.0 million pre-tax liabilities no longer
required and of $13.3 million tax liabilities no longer required.

(5) Includes special charges of $239.2 million before taxes. See Notes 12
and 13 of Notes to Consolidated Financial Statements.

(6) Represents earnings from the Company's furniture business, net of
taxes, and the estimated loss on disposal.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

ACQUISITIONS

On April 6, 1998, the Company completed the cash acquisitions of First Alert, a
leading manufacturer of smoke and carbon monoxide detectors, and Signature
Brands, a leading manufacturer of consumer and professional products. The First
Alert acquisition was valued at approximately $182 million, including $133
million of cash and $49 million of assumed debt. The Signature Brands
acquisition was valued at $255 million, reflecting cash paid, including the
required retirement or defeasance of debt.

All of the above acquisitions were recorded under the purchase method of
accounting and accordingly, the financial position and results of operations of
each acquired entity are included in the Consolidated Financial Statements from
the respective dates of acquisition. The purchase prices of the acquired
entities have been allocated to individual assets acquired and liabilities
assumed based on estimates of fair values determined by independent appraisals
at the dates of acquisition. Approximately $1.1 billion of goodwill was recorded
by the Company in connection with the acquisition of Coleman. Goodwill has been
allocated to the various operating businesses of Coleman based on the estimated
fair value of Coleman's component businesses.

ASSET IMPAIRMENT AND OTHER CHARGES

EASTPAK

During the fourth quarter of 1999, the Company announced its intent to sell
Eastpak. In March 2000, the Company entered into the Eastpak Sale Agreement with
VF Corporation to sell Eastpak. The final purchase price is subject to certain
post-closing adjustments and retention of certain liabilities. Eastpak, a
wholly-owned subsidiary of Coleman, was acquired by the Company in March 1998.
Net sales from Eastpak was approximately 5% of consolidated net sales in both
1999 and 1998. Operating income in both 1999 and 1998 was not significant. In
the fourth quarter of 1999, as a result of the Company's change in business
strategy for Eastpak, an evaluation for impairment of Eastpak's long-lived
assets was performed pursuant to SFAS No. 121. Based upon this analysis, the
Company determined that the fair market value of Eastpak's long-lived assets,
including intangibles, was less than the carrying value.

Accordingly, during the fourth quarter of 1999, the Company adjusted the
carrying value of Eastpak's net assets to its estimated fair value (less
estimated costs of sale) resulting in a non-cash impairment charge of $52
million. This charge reduced the goodwill associated with Eastpak. The fair
market value of Eastpak was determined based upon the purchase price in the
Eastpak Sale Agreement. This charge is reflected in SG&A in the 1999
Consolidated Statements of Operations. Eastpak is included in the Company's
Outdoor Leisure business group.

FIRST ALERT

Due to First Alert's financial performance in 1998 and its prospects for 1999
and beyond, the Company determined that the goodwill relating to this
acquisition was impaired. Accordingly, based on its determination of fair value,
the Company wrote off the net carrying value of First Alert's goodwill of $62.5
million in the fourth quarter of 1998.

FIXED ASSET IMPAIRMENT AND EXCESS AND OBSOLETE INVENTORY RESERVES

In the fourth quarter of 1999, in connection with the completion of the
Company's 2000 strategic planning process, the decision was made to discontinue
a number of products, primarily scales, humidifiers and certain camping stoves,
lights and air mattresses, previously made by the Company, resulting in
equipment and tooling that will no longer be utilized by the Company and
inventory levels in excess of anticipated sales volume. In addition, as a result
of the Company's business planning process, which was completed in the fourth
quarter of 1999, the Company identified certain other assets that would no
longer be required for ongoing operations. Accordingly, a charge of $8.0 million
was recorded in the fourth quarter of 1999 in Cost of Goods Sold to write
certain of these fixed assets down to their estimated fair market values.
Substantially all of this charge related to machinery, equipment and tooling at
the Company's Hattiesburg, Mississippi manufacturing facility. These assets were
taken out of service at the time of the write-down and were not depreciated
further after the write-down. These assets had a nominal salvage value and no
significant remaining carrying value as of December 31, 1999 and are expected to
be disposed of during the first half of 2000. Depreciation expense associated
with these assets approximated $0.9 million in 1999, $0.6 million in 1998 and
$0.4 million in 1997. During the fourth quarter of 1999 the Company also made
the decision to discontinue certain grill and grill accessory stock keeping
units ("SKUs"). As a result of this decision, the Company reduced the economic
useful life associated with the machinery, equipment and tooling used for these
SKUs. Approximately $3 million of additional depreciation expense was recorded
over the fourth quarter of 1999 from the time the decision was made to exit the
product line until production ceased at December 31, 1999 and resulted in the
affected assets being fully depreciated. Depreciation expense associated with
these assets was $4.6 million in 1999, $1.5 million in 1998, and $0.4
million in 1997. These assets are expected to be disposed of during the first
half of 2000, and the Company does not expect to generate significant proceeds
as a result of the disposal. Additionally, as a result of the Company's decision
to discontinue certain camping stoves, lights, air mattresses, scales and
humidifiers, a $3.0 million charge was recorded during the fourth quarter of
1999 to properly state this inventory at the lower-of-cost-or-market. The
Company also recognized approximately $0.8 million related to certain other
product lines to properly state the inventory at the lower-of-cost-or-market.
These charges for excess inventories were based upon management's best estimate
of net realizable value.

In the second quarter of 1998, the Company decided to outsource or discontinue a
substantial number of products, principally breadmakers, toasters and certain
other appliances, air and water filtration products and to eliminate certain
SKUs within existing product lines, primarily relating to appliances, grills and
grill accessories, previously made by the Company, resulting in the
identification of certain facilities and equipment that would no longer be used.
Accordingly, a charge of $29.6 million was recorded in Cost of Goods Sold to
write certain of these assets down to their estimated fair market value.
Approximately 80% of this charge related to machinery, equipment and tooling at
the Company's Mexico City and Hattiesburg, Mississippi manufacturing plants, the
estimated fair value of which was derived through an auction process. The
remainder of this charge related to tooling and equipment at various other
facilities, which either had a nominal value or the fair market value of which
was derived through an auction process. These assets were taken out of service
at the time of the write-down and consequently were not depreciated further
after the write-down. The net carrying value of these assets after the
write-down approximated $2.2 million and these assets were disposed of by
December 31, 1999. Depreciation expense associated with these assets
approximated $2.6 million in 1998, $4.2 million in 1997 and $3.5 million in
1996.

Personnel at the Mexico City facility were notified in the second quarter of
1998 that the plant was scheduled for closure at year-end 1998; accordingly, at
that time a liability of $1.8 million was recorded in Cost of Goods Sold
primarily for employee severance. The employee severance related to
approximately 1,200 positions of which approximately 1,100 were terminated, and
$1.4 million paid in severance as of December 31, 1998. Substantially all of the
remaining positions were eliminated and severance payments were made by July 31,
1999. In the third quarter of 1998, the Company recorded in Cost of Goods Sold,
an additional provision for impairment of fixed assets of $3.1 million in an
acquired entity, relating to assets taken out of service for which there was no
remaining value. The asset impairment resulted from management's decision,
during the third quarter, to discontinue certain SKUs within product lines,
principally generators, compressors and propane cylinders. These fixed assets
were taken out of service at the time of the write-down and consequently were
not depreciated further after the write-down. Depreciation expense associated
with these assets approximated $0.8 million in 1998. In the fourth quarter of
1998, the Company recorded a $7.1 million charge as a result of management's
decision,

during the fourth quarter, to outsource the production of certain appliances
(principally irons). This charge to Cost of Goods Sold primarily consisted of a
provision for certain tooling and equipment ($6.7 million) and severance and
related benefits ($0.4 million). This tooling and equipment, which had no
remaining value, was written off and depreciation of this equipment was
discontinued at the time of the write-down. Depreciation expense associated with
these assets approximated $2.4 million in 1998, $2.3 million in 1997 and $0.9
million in 1996. The severance costs related to approximately 45 production
employees. Substantially all of these employees' positions were eliminated and
the severance obligation was paid by December 31, 1999.

During 1997 and the first half of 1998, the Company built inventories in
anticipation of 1998 sales volumes which did not materialize. As a result, it
became necessary to dispose of some portions of excess inventories at amounts
less than cost. Accordingly, during 1998, when it became evident that the
anticipated sales volumes would not materialize, the Company recorded $58.2
million in charges (of which $46.4 million, $2.2 million and $9.6 million, were
recorded during the second, third and fourth quarters of 1998, respectively) to
properly state this inventory at the lower-of-cost-or-market. This inventory
primarily related to certain appliances, grills and grill accessories. The
Company also recorded a charge of $11.0 million during the second quarter for
excess inventories for raw materials and work in process that will not be used
due to outsourcing the production of breadmakers, toasters and certain other
appliances. In addition, during 1998, the Company made the decision to exit
certain product lines, primarily air and water filtration products, and to
eliminate certain SKUs within existing product lines, primarily relating to
appliances, grills and grill accessories. As a result of this decision, a $26.6
million charge was recorded during the second quarter to properly state this
inventory at the lower-of-cost-or-market. Total charges for excess inventories
recorded at the lower-of-cost-or-market, based upon management's best estimate
of net realizable value, amounted to approximately $95.8 million at December 31,
1998. See Note 12 of Notes to Consolidated Financial Statements for asset
impairment and other charges recorded in conjunction with a 1996 restructuring
plan.

RESTATEMENTS

On June 30, 1998, the Company announced that the audit committee of its board of
directors was initiating a review into the accuracy of the Company's prior
financial statements. The audit committee's review has since been completed and,
as a result of its findings, the Company has restated its previously issued
consolidated financial statements for 1996 and 1997 and the first quarter of
1998. Based upon the audit committee's review, it was determined that some
revenue had been inappropriately recognized, some costs and allowances had not
been accrued or were improperly recorded, and some costs were inappropriately
included in, and subsequently charged to, restructuring, asset impairment and
other costs within the Consolidated Statements of Operations for the years ended
December 29, 1996 and December 28, 1997 and the three months ended March 31,
1998. The Company's financial statements for the years ended December 28, 1997
and December 29, 1996 were restated, audited and filed on Form 10-K/A with the
SEC on November 9, 1998. The accompanying Consolidated Financial Statements
present the restated results.

In connection with the restatements referred to above, Arthur Andersen advised
the Company that it believed there were material weaknesses in the Company's
internal controls. In order to address these material weaknesses, the Company
has increased the number of senior financial personnel and has implemented
comprehensive review procedures of operating and financial information.
Additionally, as explained in more detail under "--Year 2000 Readiness
Disclosure" within this Item 7, the Company significantly enhanced its operating
systems.

FISCAL YEAR

To standardize the fiscal period end of the Company with those of the recently
acquired entities, Coleman, Signature Brands and First Alert, effective with its
1998 fiscal year, the Company has changed its fiscal year end from the Sunday
nearest December 31 to a calendar year fiscal year. See Note 1 of Notes to
Consolidated Financial Statements.

SIGNIFICANT AND UNUSUAL CHARGES

Consolidated operating results for 1999 and 1998 were impacted by a number of
significant and unusual charges. Operating income, adjusted for these items, is
summarized in the following table and succeeding narrative.

COMBINED HISTORICAL
RESULTS
YEAR ENDED DECEMBER 31, YEAR ENDED
------------------------ DECEMBER 31,
1999 1998 1998
---------- ---------- ----------

(Amounts in millions)

Net sales - As reported $ 2,398.0 $ 1,836.9 $ 2,138.7

Gross margin - As reported 604.6 55.0 130.1
Significant and unusual items:
Provision for inventory 3.8 95.8 95.8
Fixed asset charges 11.2 39.4 39.4
Warranty reserve adjustments 3.7 -- --
Insurance proceeds and other (3.0) 0.4 0.4
Purchase accounting -- 28.1 28.1
---------- ---------- ----------
Adjusted gross margin 620.3 218.7 293.8

Selling, general and administrative
expense ("SG&A") - As reported 701.2 725.0 827.0
Significant and unusual items:
Asset impairment (52.0) (62.5) (62.5)
Issuance of warrants to M&F -- (70.0) (70.0)
Former employees' severance and deferred compensation (4.7) (34.4) (34.4)
Year 2000 and systems initiatives expenses (26.9) (10.0) (10.0)
Restatement related expenses (7.6) (20.4) (20.4)
Office relocation expense -- (4.0) (4.0)
Certain litigation and environmental reserve adjustments (7.6) (3.7) (3.7)
Contract terminations, facilities closing expenses and other (6.0) -- (11.9)
---------- ---------- ----------
Adjusted SG&A 596.4 520.0 610.1
---------- ---------- ----------
Adjusted operating income (loss).................................. $ 23.9 $ (301.3) $ (316.3)
========== ========== ==========

The combined historical results of operations for the year ended December 31,
1998 include the combined historical results of Coleman, Signature Brands and
First Alert from the beginning of 1998 to their respective acquisition dates.
The combined historical results do not include pro forma purchase accounting
adjustments including those related to the amortization of the purchase price of
these acquisitions. Certain amounts included in the historical results of the
acquired companies have been reclassified to conform to the Company's
presentation. Presentation of these combined results is made to enhance
comparability between the periods presented and such amounts are not necessarily
indicative of the combined results that would have occurred had these
acquisitions been consummated at the beginning of 1998.

PROVISION FOR INVENTORY AND FIXED ASSET CHARGES

In addition to the charge taken in 1998, the excess and obsolete inventory
existing in 1998 has impacted the Company's operating results in several ways,
with two primary effects. First, gross margins have been impacted by sales, at
below normal prices, of obsolete inventory into non-traditional channels and
excess inventory into traditional channels. In addition, due to the high levels
of excess inventory at the end of 1998, the Company's usage of its manufacturing
facilities has been lower than normal, resulting in lower fixed cost absorption,
which in turn, reduced gross margins in 1998 and 1999 for certain of the
Company's products.

See "Fixed Asset Impairment and Excess and Obsolete Inventory Reserves" above
for further information.

WARRANTY RESERVE ADJUSTMENTS

The Company periodically reviews its warranty reserves for adequacy based upon
the accumulation of historical information and experience. As a result of this
review process, utilizing the accumulation of additional historical information
and based upon an additional year's experience, the Company recorded a $3.7
million adjustment to the warranty reserve in the fourth quarter of 1999 related
to an acquired company. The additional information and experience provided the
basis for conforming the computation of the reserve to the methodology that has
been historically utilized by the Company and is reflective of management's
estimate of warranty exposure related to this business at December 31, 1999.

INSURANCE PROCEEDS AND OTHER

In October 1999, one warehouse facility utilized by the Company for storage
experienced a fire which resulted in the loss of approximately 80% of the
inventory at that location. This fair market value of the inventory loss was
fully covered by insurance. As of December 31, 1999, results of operations
include $4.5 million related to an insurance settlement. Partially offsetting
the insurance settlement gain are customs duties on imports of manufactured
goods in a foreign jurisdiction ($1.1 million) relating to an adjustment of
these estimated duties payable. This category also includes in 1999 $0.4 million
related to Year 2000 and systems initiatives expenses. See related discussion
below. The 1998 period includes $0.4 million for severance and other benefits
relating to the Company's decision to outsource the production of irons, see
"Fixed Asset Impairment and Excess and Obsolete Inventory Reserves" above.

PURCHASE ACCOUNTING

The Company recorded the acquisitions of Coleman, First Alert and Signature
Brands using the purchase method of accounting. In accordance with this
accounting method, inventory pertaining to the acquisitions was recorded at fair
value. The fair value of the inventory exceeded the book value reflected on the
balance sheets of the acquired companies as of the respective acquisition dates.
The excess of the fair value of inventory over its pre-acquisition book value
was recorded in cost of sales as the inventory was sold. The impact of this
purchase accounting adjustment was $20.5 million and $7.6 million in the second
and third quarters of 1998, respectively. The Company's results in 2000 will
include additional adjustments of this nature due to the completion of the
Coleman merger in January 2000.

ASSET IMPAIRMENT

See "Asset Impairment and Other Charges" above.

ISSUANCE OF WARRANTS TO M&F

On August 12, 1998, the Company announced that, following investigation and
negotiation conducted by a special committee of the Company's board of directors
consisting of four outside directors not affiliated with M&F, the Company had
entered into a settlement agreement with a subsidiary of M&F pursuant to which
the Company was released from certain threatened claims of M&F and its
subsidiaries arising from the Coleman acquisition. In connection with the
settlement agreement, M&F agreed to provide certain management personnel and
assistance to the Company in exchange for the issuance to the M&F subsidiary of
a warrant expiring August 24, 2003 to purchase up to 23 million shares of the
Company's common stock at a cash exercise price of $7.00 per share, subject to
anti-dilution adjustments. The Company concluded that the agreement to issue
this warrant did not result in a new measurement date for the purposes of
determining the purchase price for Coleman and accounted for the issuance of
this warrant in the third quarter of 1998 as a cost of settling a potential
claim. Accordingly, a $70.0 million non-cash SG&A expense was recorded in the
third quarter of 1998, based upon a valuation performed as of August 1998 using
facts existing at that time. The valuation was conducted by an independent
consultant engaged by the special committee of the board of directors.

FORMER EMPLOYEES' SEVERANCE AND DEFERRED COMPENSATION

The Company recognized severance costs of $4.7 million during 1999 ($0.5 million
in the third quarter and $4.2 million in the fourth quarter) primarily related
to management consolidations in the Household business segment. The severance
costs related to approximately 85 positions. Substantially all of these
positions were elimianted by December 31, 1999 and substantially all of the
severance obligation will be paid by December 31, 2000. The management
consolidations are the result of the Company's strategic business decision in
the fourth quarter of 1999 to enhance efficiency of operations.

On February 20, 1998, the Company entered into new three-year employment
agreements ("1998 Employment Agreements") with its then Chairman and Chief
Executive Officer and two other senior officers of the Company. The 1998
Employment Agreements provided for, among other items, the acceleration of
vesting of restricted stock and the forfeiture of unvested restricted stock that
had been granted under the executives' prior employment agreements, new
restricted stock grants and options to purchase common shares. In addition, the
1998 Employment Agreements provided for income tax gross-ups with respect to any
tax assessed on the restricted stock grants and acceleration of vesting of
restricted stock. Total compensation expense recognized in the first quarter of
1998 related to these items was approximately $31 million. The Company also
recognized approximately $3.7 million of severance for former employees in the
third quarter of 1998. (See Note 8 of Notes to Consolidated Financial
Statements.)

YEAR 2000 AND SYSTEMS INITIATIVES EXPENSES

See "Year 2000 Readiness Disclosure" within this Item 7 - "Management's
Discussion and Analysis of Financial Condition and Results of Operations".

RESTATEMENT RELATED EXPENSES

OFFICE RELOCATION EXPENSE

In 1998, the Company made the decision to relocate the corporate headquarters
and exit several existing building leases in connection with a plan to
consolidate office space. Accordingly, a charge of $4.0 million was recorded in
the third quarter primarily related to lease termination fees and cancellation
penalties.

CERTAIN LITIGATION AND ENVIRONMENTAL RESERVE ADJUSTMENTS

During 1999 the Company recorded charges of $5.2 million related to two
litigation matters arising out of circumstances the Company believes are not
likely to reoccur. Additionally, during 1999, the Company recorded additional
environmental reserves of $2.4 million, primarily related to divested
operations.

The 1998 charge consists of a $3.0 million reversal in the first quarter of 1998
of environmental reserves which were no longer required as a result of a
favorable development at a remediation site, offset by additional reserves of
$6.7 million, primarily related to divested operations.

CONTRACT TERMINATIONS, FACILITIES CLOSING EXPENSES AND OTHER

In the fourth quarter of 1999, the Company recorded a charge of $1.2 million as
a result of a decision to terminate a contract for manufacturing supplies and
factory services. Additionally, in the first quarter of 1999 a charge of
approximately $1 million was recorded relating to the renegotiation of a
contract with one of the Company's licensees.

In the fourth quarter of 1999, in connection with the completion of the
Company's strategic planning process, the decision was made to close several
under-performing Sunbeam retail stores. As a result of this decision, the
Company recorded a charge in the fourth quarter of 1999 of approximately $2
million, primarily related to the write-off of leasehold improvements and lease
termination fees.

During 1999, the Company recorded an additional $1.8 million charge related to
the following: (i) approximately $0.9 million was recorded through the end of
the third quarter as a result of management's strategic decision to close a
warehouse in Mexico; (ii) approximately $0.6 million was recorded in the fourth
quarter to properly value certain assets related to the Company's Hong Kong
business, and (iii) approximately $0.3 million was recorded at Coleman in the
fourth quarter for adjustment of restructuring reserves.

During the first quarter of 1998, Coleman, Signature Brands and First Alert
incurred costs associated with their acquisitions by the Company of $7.2
million, $2.7 million and $2.0 million, respectively. These costs included
advisory, legal and accounting fees.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

Net sales for the twelve months ended December 31, 1999 and 1998 were $2,398.0
million and $1,836.9 million respectively, an increase of $561.1 million.
Results for the twelve months ended December 31, 1998 include Coleman, Signature
Brands and First Alert from their respective acquisition dates. After adjusting
1998 sales to include sales of the acquired companies for the periods from the
beginning of 1998 through the respective dates of acquisition, combined
historical net sales would be $2,138.7 million. 1999 net sales increased
approximately $259 million or 12% over 1998 combined historical net sales.
Information that adjusts for the results of the acquisitions prior to the actual
acquisition dates (the "combined historical" information) is provided for
informational purposes only and is to enhance comparability of the period
presented. This information is not necessarily indicative of what the combined
results would have been had these acquisitions occurred at the beginning of the
periods presented or the results for any future period. Product sales in 1998
were affected by the channel loading which took place during 1997 and the first
quarter of 1998. The Company believes the effect of this prior business practice
resulted in higher levels of sales during 1998 of approximately $50 million.
This factor affects the year-to-year comparisons for all of the Company's
operating groups. The Company believes that over half of the impact of this
prior business practice related to the Household business segment and the
remainder related to Outdoor Cooking products and the International group. The
increase in net sales for 1999 over 1998 combined historical net sales results
primarily from the Outdoor Leisure group, which had an increase in net sales of
approximately $167 million in 1999 as compared to the combined historical net
sales in the same period in the prior year. This increase over combined
historical net sales

was largely due to an increase in sales of outdoor recreation products
(primarily related to appliances and fuel products) and Powermate(R) generators
(both aggregating approximately $182 million). The higher level of sales of
these products is believed to be partially attributable to heightened consumer
sensitivity to the need for emergency preparedness. The Company believes that
this heightened sensitivity is reflective of a combination of factors, including
weather conditions and Year 2000 considerations and to the extent sales resulted
from Year 2000 concerns, sales may be adversely affected in 2000. The Company
has considered the potential for higher than normal returns relative to its
products that are considered Year 2000 related. Through the first quarter of
2000, the percentage of returns have approximated historical rates. Outdoor
Cooking products net sales increased approximately $24 million in 1999 as
compared to 1998 combined historical net sales. Excluding the estimated effect
on 1998 of channel loading, Outdoor Cooking products net sales increased
approximately $10 million. The increase in Outdoor Cooking net sales is
primarily attributable to gas grills and grill accessories. Partially offsetting
the increases in 1999 net sales over 1998 combined historical net sales is the
effect of the divestitures of the Coleman safety and security business in March
1998 and Coleman Spas, Inc. in October 1998 (approximately $34 million) and
weaknesses in domestic net sales of Eastpak products (approximately $3 million).
Household net sales in 1999 increased approximately $25 million compared to 1998
combined historical net sales. This increase is primarily attributable to
personal care products as a result of a strengthening in the retail environment
and expansion of product distribution within existing channels. Excluding the
estimated effect on 1998 of channel loading, Household net sales were
approximately the same as in the prior year. The Company believes that
approximately two-thirds of the effect of channel loading on Household net sales
related to the Company's appliance products. International net sales in 1999
increased approximately $73 million over 1998 combined historical net sales. A
portion of this increase related to the higher customer inventory levels in 1998
as compared to 1999. Higher sales in Canada, Europe and Japan resulted
predominantly from strong retail demand of Powermate(R) and outdoor recreation
products. This increase was partially offset by the impact of weak economic
conditions in Latin America.

Gross margin for the twelve months ended December 31, 1999 and 1998 was $604.6
million and $55.0 million respectively, an increase of $549.6 million. As a
percentage of net sales, gross margin improved to approximately 25% in 1999 as
compared to approximately 3% in the 1998 period. Adjusting for the combined
results of the acquired companies and excluding the effects of 1999 and 1998
significant and unusual items, which are summarized above under the heading
"Significant and Unusual Charges", gross margin for 1999 increased approximately
$327 million over the 1998 combined historical gross margin. Adjusted for the
significant and unusual charges and for the effect of the acquired companies,
the gross margin percentages improved to 26% and 14% in 1999 and 1998,
respectively. The Outdoor Leisure group contributed approximately 40% of the
1999 gross margin improvement over the 1998 combined historical gross margin.
Approximately 80% of the improvement in the Outdoor Leisure group's gross margin
resulted from higher sales volumes, volume-related manufacturing overhead
absorption improvements, as well as improvements in manufacturing. The balance
of the increase resulted from improved product mix and lower levels of returns.
The Household group contributed approximately 30% of the 1999 gross margin
improvement over the 1998 combined historical gross margin. The improvement in
the Household group's gross margin resulted primarily from lower sales deduction
rates, improved manufacturing processes and controls and improved product mix.
The International group contributed the balance of the 1999 gross margin
improvement over 1998 combined historical gross margin. Approximately 40% of the
improvement in the International group's gross margin resulted from the shut
down of the Mexico City manufacturing facility which had experienced high
material usage costs and employee benefit costs in the prior year. The remaining
improvement resulted from increased sales volume, a lower level of product
returns and improved product mix.

SG&A expense for the twelve months ended December 31, 1999 was $701.2 million, a
decrease of $23.8 million or 3.3% over the prior year. After adjusting 1998 SG&A
expense to include the acquired companies' SG&A expense for the period from the
beginning of 1998 through the respective dates of acquisition, combined
historical SG&A expense was $827.0 million. Excluding the effects of 1998
significant and unusual charges, as described above under "Significant and
Unusual Charges", adjusted 1998 SG&A expenses were approximately $610 million.
Excluding the significant and unusual charges, as described above under
"Significant and Unusual Charges", adjusted 1999 SG&A costs were $596.4 million,
a decrease of approximately $14 million over adjusted 1998 SG&A expense. The
decrease in SG&A expenses is primarily attributable to certain 1998 expenses
which did not reoccur in 1999. These 1998 expenses include increases associated
with restructuring reserves at Coleman (approximately $7 million) and higher bad
debt expense (approximately $20 million). The effect of these 1998 non-recurring
expenses is partially offset by higher levels of selling and administrative
costs during 1999 driven by increased net sales and increased spending of
approximately $8 million for research and development ("R&D"). The higher levels
of R&D costs relate to new product development, including "Smart Products",
which the Company plans to offer through its Thalia subsidiary in 2001. In
addition, 1999 includes the full year effect of headcount that was to a large
extent added during the latter part of 1998 to support future growth as well as
to provide the resources necessary to support the decision to bring in-house
certain functions that had previously been outsourced. The Company is in the
process of fully integrating certain of these functions and expects that when
this process has been completed consolidated SG&A expense for these functions
will be reduced.

Operating results for 1999 and 1998 were losses of $96.6 million in 1999 and
$670.0 million in 1998. Adjusted for the historical results of the acquired
companies and excluding significant and unusual charges, as previously
described, operating results for the 1999 period were a profit of $23.9 million
and a loss of $316.3 million in the 1998 period. This change resulted from the
factors discussed above.

Interest expense increased from $130.6 million in 1998 to $200.2 million in
1999. Approximately 50% of the change related to higher borrowing levels in 1999
resulting primarily from borrowings for the acquisitions that were outstanding
for the entire 1999 period as compared to only a portion of the 1998 period. The
balance of this increase was primarily driven by (i) the increase in the expense
related to liquidated damages payable to debenture holders (approximately $2
million); (ii) interest associated with certain customs duties on imports of
manufactured goods (approximately $4 million), See "Insurance Proceeds and
Other" above, (iii) the impact of higher interest rates during 1999, and (iv)
increased borrowings to fund operations during 1999.

Other income, net of $3.6 million in 1999 included a gain of approximately $4
million relating to the sale of the Mexico City facility. Other income, net in
1999 also included foreign exchange gains ($2.6 million) which were largely
offset by credit facility fees. Other income, net of $4.3 million in 1998
included $8.0 million from the settlement of a lawsuit partially offset by net
foreign exchange losses, primarily from Mexico.

The minority interest reported in 1999 and 1998 relates to the minority interest
held in Coleman by public stockholders.

During 1999, the Company recorded a tax benefit of $8.8 million as compared to a
benefit of $10.1 million in the prior year. The 1999 current tax benefit
primarily resulted from federal income tax refunds received during the year. The
current tax benefit is net of taxes on earnings of foreign subsidiaries of
approximately $3 million. During 1999, the Company also recognized deferred tax
benefits relating to the asset impairment charge recorded in the fourth quarter
and as a result of the net operating losses incurred. During 1998, the current
tax provision arose largely from taxes on the earnings of foreign subsidiaries
as well as certain franchise taxes. Deferred tax benefits were recognized in
1998 principally due to net operating losses incurred subsequent to the
acquisitions. The deferred tax benefits were realized in both years through the
reduction of deferred tax credits that were established in connection with the
acquisitions.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 28, 1997

Consolidated operating results for 1998 and 1997 were impacted by a number of
significant and unusual charges. Operating (loss) income presented on a
comparable basis, and excluding these items, is summarized below and in the
succeeding narrative.

FISCAL YEAR ENDED
------------------------
DECEMBER 31, DECEMBER 28,
1998 1997
---------- ----------

(Amounts in millions)

Net sales - As reported $ 1,836.9 $ 1,073.1
Less: Net sales from acquired companies (1,009.0) --
---------- ----------
Net sales, excluding acquired companies 827.9 1,073.1
Significant and unusual items:
Impact of change in fiscal year end (5.5) --
Reversal of reserves no longer required -- (5.4)
Sales of excess or discontinued inventory (12.7) (31.3)
Sales related to divested product lines -- (4.2)
---------- ----------
Adjusted net sales 809.7 1,032.2

Gross margin - As reported 55.0 242.1
Less: Gross margin from acquired companies (205.1) --
---------- ----------
Gross margin, excluding acquired companies (150.1) 242.1

Significant and unusual items:
Provision for inventory 95.8 --
Fixed asset charges 39.4 --
Reversal of reserves no longer required -- (15.8)
Capitalization of manufacturing supply inventories -- (2.8)
Impact of change in fiscal year end (0.8) --
---------- ----------
Adjusted gross margin (15.7) 223.5

Selling, general and administrative
expense ("SG&A") - As reported 725.0 152.6
Less: SG&A from acquired companies (329.9) --
---------- ----------
SG&A, excluding acquired companies 395.1 152.6

Significant and unusual items:
Issuance of warrants to M&F (70.0) --
Former employees' deferred compensation and severance (34.4) --
Year 2000 and system initiatives expenses (6.1) --
Restatement related expenses (20.4) --
Restructuring related charges -- (15.8)
Environmental reserve adjustments (3.7) --
Reversal of reserves no longer required -- 12.1
Impact of change in fiscal year end and office relocation expense (6.3) --
---------- ----------
Adjusted SG&A 254.2 148.9
---------- ----------
Adjusted operating (loss) gain $ (269.9) $ 74.6
========== ==========

The results from operations for the year ended December 31, 1998 are adjusted to
exclude the results of Coleman, Signature Brands and First Alert from their
respective acquisition dates. Presentation of 1998 results excluding the
acquired companies is provided to enhance comparability between the periods
presented and such amounts are not necessarily indicative of the results that
could have been achieved had these acquisitions not occurred during 1998.

Results of operations for the year ended December 31, 1998 include the results
of Coleman from March 30, 1998 and of Signature Brands and First Alert from
April 6, 1998, the respective dates of the acquisitions. The acquired companies
generated net sales of $1,009.0 million from the acquisition dates noted above
through December 31, 1998, with corresponding gross margin of $205.1 million, or
20% of sales. SG&A costs recorded by the acquired companies were $329.9 million
in the period, yielding an operating loss of $124.8 million.

For the acquired companies, net sales from the dates of the acquisitions through
fiscal year-end were approximately $152 million lower than the same period in
the prior year. This decline was caused by lower net sales at Coleman ($81.5
million), Signature Brands ($31.2 million) and First Alert ($39.2 million).
Excluding the effects of Coleman's sale of its safety and security business in
March 1998 and the discontinuation of its pressure washer business during 1997,
Coleman's 1998 sales would have been approximately $4 million lower than in
1997. The Company believes that Signature Brands' decline, primarily in its
coffee and tea products, resulted largely from lost distribution and
insufficient attention to the business during part of 1998. The Company believes
that all of the acquired businesses were, to some extent, impacted by the
disruption that arose from the integration with the Company and the related

management changes, both at the acquired companies and at the Company. First
Alert's sales decline related predominantly to increased inventory positions in
the domestic channel in 1997 as compared to 1998 with the remaining decrease
primarily related to more favorable weather conditions in the fourth quarter of
1997 as compared to the same period in 1998 which affected consumer shopping
patterns. Excluding the effects from purchase accounting, and the write-off of
First Alert's goodwill, as discussed in Note 2 of Notes to Consolidated
Financial Statements and approximately $12 million of transaction costs incurred
by the acquired companies relating to them being purchased by Sunbeam, operating
profit for these three companies declined by approximately $33 million since the
acquisitions in 1998 as compared to the same period in the prior year, resulting
primarily from lower net sales.

Consolidated net sales for the year ended December 31, 1998 were $1,836.9
million, an increase of $763.8 million versus the year ended December 28, 1997.
After excluding:

/bullet/ $1,009.0 million of sales generated by the acquired companies;

/bullet/ $5.5 million of sales in 1998 resulting from the change in
fiscal year end, as described in Note 1 to the Consolidated
Financial Statements;

/bullet/ $12.7 million in 1998 and $31.3 million in 1997 from sales of
excess or discontinued inventory for which the inventory
carrying value was substantially equivalent to the sales
value;

/bullet/ $4.2 million from 1997 sales relating to divested product
lines which are not classified as discontinued
operations--time and temperature products and Counselor and
Borg branded scales, and for which the inventory carrying
value was substantially equivalent to the sales value; and

/bullet/ a $5.4 million benefit in 1997 from the reduction of
cooperative advertising accruals no longer required
(cooperative advertising costs are recorded as deductions in
determining net sales);

net sales on an adjusted basis ("Adjusted Sales") of $809.7 million in 1998
decreased approximately 22% from Adjusted Sales of $1,032.2 million in 1997.
Product sales were adversely impacted by a number of factors, with the largest
being changes in retail inventory levels from channel loading which took place
in 1997 and the first quarter of 1998. Sunbeam believes the year-to-year effect
of these inventory reductions amounted to approximately $100 million.
Additionally, losses in distribution of outdoor cooking products estimated at
approximately $60 million, the estimated effect of price discounting on
appliance and grill products of approximately $14 million, and estimated higher
provisions for customer returns and allowances of approximately $30 million
contributed to the lower sales in 1998. The increase in customer returns and
allowances resulted from:

/bullet/ increased returns of approximately $16 million principally
resulting from channel loading and other aggressive sales
practices (estimated at approximately $9 million) which began
in the fourth quarter of 1997 and continued in the first
quarter of 1998, a blanket recall ($3.0 million) and the
discontinuance of certain product lines (approximately $4
million) principally air and water products; and

/bullet/ additional customer allowances of approximately $14 million
primarily to induce sales during the first quarter of 1998.

The remaining sales decline was due in part to exiting some product SKUs.

Domestic Adjusted Sales declined approximately 21% or $170 million from 1997.
The Company believes more than half of the sales decline was due to increased
retail inventory levels in 1997 versus decreased inventory positions at
customers in 1998. Excluding this effect, sales were still lower than the prior
year throughout the business, with the most significant decline occurring in
outdoor cooking products sales. During 1997, the Company lost a significant
portion of its outdoor cooking products distribution, including the majority of
its grill parts and accessories products distribution. The outdoor cooking
products sales decline was attributable predominantly to this lost distribution
and to price discounting. The majority of the remaining sales decline was due to
higher provisions for customer returns and allowances.

International Adjusted Sales, which represented 22% of Adjusted Sales for 1998,
decreased approximately 24% compared with the International Adjusted Sales for
1997. The Company believes this sales decline was primarily attributable to
decreasing customer inventory levels as compared with the prior year. Sales were
also adversely impacted by a decision to stop selling to some export
distributors in Latin America and by poor economic conditions in that region. In
addition, lost distribution in Canada contributed to the sales decline from the
prior year.

Excluding the effects of:

/bullet/ the gross margin generated from the inclusion of the acquired
companies' operations in the period of $205.1 million;

/bullet/ $0.8 million in 1998 from the impact of the change in fiscal
year-end;

/bullet/ $135.2 million in 1998 in charges recorded in the second
($113.6 million), third ($5.3 million) and fourth ($16.3
million) quarters related to excess inventory and fixed assets
impairments;

/bullet/ $15.8 million from the benefit in 1997 from the reversal of
reserves no longer required, including $5.4 million of
cooperative advertising accruals, inventory valuation
allowances of $7.0 million, and liabilities for exiting of
facilities and plant consolidations provided for prior to 1996
of $3.4 million. These liabilities were provided for by the
Company, principally in 1996, based upon its best available
estimate at the time of the probable liabilities. When
information became available that the amounts provided were in
excess of what was required, the Company reduced the
applicable reserves;

/bullet/ a $2.8 million benefit recorded in the second quarter of 1997
resulting from the Company changing its method of accounting
to capitalize manufacturing supplies inventories, whereas,
previously these inventories were charged to operations when
purchased;

there was a negative gross margin of $15.7 million for 1998 versus a gross
margin of $223.5 million for 1997. This reduction in gross margin was
principally attributable to the following:

/bullet/ approximately $145 million related to lower sales volume and
unfavorable manufacturing efficiencies resulting from lower
production levels associated with the lower sales volumes and
high inventory levels in 1998;

/bullet/ approximately $65 million related to lower price realization,
higher costs of customer returns and allowances, and adverse
sales mix in 1998;

/bullet/ approximately $12 million related to higher costs in 1998
associated with warranty, of which $3.0 million related to a
blanket recall, with the remaining increase attributable to
increased provisions in response to higher overall warranty
expense experience; and

/bullet/ approximately $20 million related to unfavorable inventory
adjustments, of which the most significant single factor was
physical inventory adjustments in the domestic business.

Adverse product sales mix was due in part to the loss of a majority of the grill
accessory products distribution as accessories generate significantly better
margins than the average margins on sales of most of the Company's other
products.

Excluding the effects of the following, SG&A expenses were approximately $254
million in 1998, approximately $105 million, or 70%, higher than in 1997:

/bullet/ $329.9 million of SG&A charges in the acquired companies,
including the $62.5 million goodwill write-off related to
First Alert;

/bullet/ $70.0 million recorded in the third quarter of 1998 related to
the issuance of a warrant to a subsidiary of M&F, as discussed
below;

/bullet/ $2.3 million of SG&A expense in 1998 from the change in the
fiscal period;

/bullet/ a $12.1 million benefit in 1997 from the reversal of reserves
no longer required. The 1997 benefit consists primarily of an
$8.1 million reversal of litigation reserves, established in
1996, which were no longer required in the fourth quarter of
1997 due to a favorable settlement during 1997. The remaining
$4.0 million 1997 benefit consists of reversals of other
accruals primarily relating to consulting fees, health
insurance and advertising;

/bullet/ approximately $31 million of 1998 compensation expense
recorded in connection with the 1998 Employment Agreements
with Sunbeam's former Chairman and Chief Executive Officer and
two other former senior officers and $3.7 million of severance
in 1998 for some former employees. The 1998 Employment
Agreements provided for Sunbeam to pay these former employees
amounts which reimbursed them for their personal tax
liabilities resulting from shares issued in connection with
the accelerated vesting of restricted stock granted under
their July 1996 agreements ($6.9 million), as well as on the
new unrestricted stock grants under the February 1998
agreements ($9.8 million). The charge also includes the value,
at approximately $39 per share, of 300,000 restricted shares
and 45,000 restricted shares which vested in February 1998 for
Sunbeam's then Chairman and Chief Executive Officer and two
other then senior officers, respectively ($13.6 million). In

addition, $0.4 million was expensed during 1998 relating to
the amortization of the 1996 restricted stock awards. See Note
8 of Notes to Consolidated Financial Statements for
information regarding the terms of these employment
agreements;

/bullet/ $20.4 million, $6.1 million, and $4.0 million of costs
recorded in 1998 related to costs associated with the
restatement efforts, principally representing legal,
accounting and auditing, and consulting costs of $14.1
million, $5.7 million and $0.6 million, respectively, Year
2000 compliance efforts and a corporate office relocation,
respectively;

/bullet/ $15.8 million of restructuring related charges recorded in
1997, charged to operations as incurred, represent employee
relocation and recruiting ($6.2 million), equipment relocation
and installation ($5.6 million) and package redesign costs
($4.0 million);

/bullet/ $3.7 million of increased environmental reserves for divested
and closed facilities (inclusive of the impact of the $3.0
million environmental reserve reversal discussed below).
Approximately half of the environmental reserve increase of
$6.7 million reflected revisions to estimates of costs to
remediate existing sites. These revisions were based on
additional information obtained by the Company in the fourth
quarter of 1998 about costs of planned remediation actions and
costs associated with additional remediation actions. The
remaining amount was to provide for revisions to reserves for
estimated losses for damages related to environmental sites.
These revisions were based on additional information obtained
by the Company in the fourth quarter of 1998 regarding the
level of damages sought and the costs and probability of
defending the Company's position in these actions. The 1998
reserve increases were partially offset by a $3.0 million
reversal in the first quarter of 1998 of environmental
reserves which were no longer required as a result of a
favorable development at a remediation site.

The increase of approximately $105 million in SG&A expense in 1998 over 1997 is
principally due to several factors:

/bullet/ Corporate administrative costs increased by approximately $47
million, reflecting additional personnel and related
relocation, travel and other costs, as well as increased
outside provider fees, telecommunications expense and
insurance.

/bullet/ Higher allowances for accounts receivable in 1998, accounting
for approximately $20 million of the increase, related
primarily to collection issues with customers in the United
States and in Latin America, including several major customers
who have filed and/or threatened bankruptcy.

/bullet/ Advertising, marketing and selling expenses increased by
approximately $13 million, reflecting a national television
campaign for grills and increased activity in market research,
package design and sales efforts. Higher inventory levels in
1998 and costs associated with outsourcing small parts
fulfillment led to higher distribution and warehousing costs
of approximately $12 million.

/bullet/ Settlement of a patent infringement action resulted in
additional expense of approximately $4 million. Remaining
legal expenses recorded in the year of approximately $1
million for investigation, defense and settlement of both new
and previously existing issues were nearly equal to amounts
incurred for similar items in 1997. Additionally, as described
above, SG&A includes $14.1 million of legal costs recorded in
1998 associated with the restatement efforts.

In November 1996, the Company announced the details of a restructuring plan. The
plan included the consolidation of administrative functions, the reduction of
manufacturing and warehouse facilities, the centralization of the Company's
procurement function, the reduction of the Company's product offerings and SKUs
and the elimination of some businesses and product lines. As part of the
restructuring plan, the Company consolidated six divisional and regional
headquarters functions into a single worldwide corporate headquarters and
outsourced some back office activities resulting in a reduction in total
back-office/administrative headcount. Overall, the restructuring plan called for
a reduction in the number of production facilities from 26 to 8 and the
elimination of over 6,000 positions from the Company's workforce, including
3,300 from the disposition of some business operations and the elimination of
approximately 2,800 other positions, some of which were outsourced. The Company
completed the major phases of the restructuring plan by July 1997.

During 1997, the Company determined that the amounts accrued at December 29,
1996 for Restructuring and Asset Impairment Charges recorded in fiscal 1996
exceeded amounts ultimately required, principally due to reductions in
anticipated severance and employee benefit costs of $7.9 million ($2.1 million
and $5.8 million recognized in the third and fourth quarters, respectively) and
reductions in estimated lease payments of $6.7 million ($3.7 million and $3.0
million recognized in the third and fourth quarters, respectively) resulting
from better than anticipated rentals received under sub-leases and favorable
negotiation of lease terminations. Accordingly, the fiscal 1997 Consolidated
Statement of Operations included $14.6 million of benefit ($5.8 million in the
third quarter and $8.8 million in the fourth quarter of 1997) related to the
reversal of accruals no longer required, which were recorded as these reduced
obligations became known.

At December 28, 1997, the Company had $5.2 million in liabilities accrued
related to the 1996 restructuring plan, including $1.2 million of severance
related costs and $4.0 million related to facility closures, which principally
represented future lease payments, net of sub-leases, on exited facilities. The
remaining balance in the restructuring reserve of $0.6 million and $1.2 million
at December 31, 1999 and 1998, respectively, relates to facility closures.
During both 1999 and 1998, this liability was reduced as a result of cash
expenditures.

On August 12, 1998, the Company announced that, following investigation and
negotiation conducted by a special committee of the board of directors
consisting of four outside directors not affiliated with M&F, the Company had
entered into a settlement agreement with a subsidiary of M&F, pursuant to which
the Company was released from certain threatened claims of M&F and its
affiliates arising from the Coleman acquisition and M&F agreed to provide
certain management personnel and assistance to the Company in exchange for the
issuance to the M&F subsidiary of a warrant expiring August 2003 to purchase up
to 23 million shares of the Company's common stock at a cash exercise price of
$7.00 per share, subject to antidilution adjustments. The Company concluded that
the agreement to issue this warrant did not result in a new measurement date for
the purposes of determining the purchase price for Coleman and has accounted for
the issuance of this warrant as a cost of settling a potential claim.
Accordingly, a $70.0 million non-cash SG&A expense was recorded in the third
quarter of 1998, based on a valuation performed as of August 1998 using facts
existing at that time. The valuation was conducted by an independent consultant
engaged by the special committee of the board of directors.

Operating results for 1998 and 1997, on an adjusted basis as described above,
were a loss of approximately $270 million in 1998 and a profit of approximately
$75 million in 1997. This change resulted from the factors discussed above.

Interest expense increased from $11.4 million for the twelve months of 1997 to
$130.6 million for the same period in 1998. Approximately 70% of the change
related to higher borrowing levels in 1998 for the acquisitions, with the
remainder due to increased borrowings to fund working capital, capital
expenditures and the operating losses.

Other income, net increased in 1998 by $4.3 million due to approximately $8
million from the settlement of a lawsuit, and approximately $4 million of
increased net gains from foreign exchange in the period. The foreign exchange
net gains were primarily from Mexico. Increased losses on sales of fixed assets
of approximately $5 million and increased expenses related to the Credit
Facility partially offset the above mentioned income. The increased credit
facility expenses largely related to unused facility fees.

The minority interest reported in 1998 relates to the minority interest held in
Coleman by public stockholders.

During 1998, the current tax provision arose largely from taxes on the earnings
of foreign subsidiaries as well as franchise taxes. Deferred tax benefits were
recognized in 1998 principally due to net operating losses incurred subsequent
to the acquisitions. These benefits were realized through the use of deferred
tax credits that were established in connection with the acquisitions to the
extent that such credits are expected to be realized in the loss carryforward
period. Throughout 1998, the Company increased the income tax valuation
allowance on deferred tax assets to $290.5 million. This increase reflects
management's assessment that it is more likely than not that these deferred tax
assets will not be realized through future taxable income. This assessment,
which was initially made in the fourth quarter of 1997, resulted from the
significant leverage undertaken by the Company in connection with its
acquisitions and the continuing decline in the Company's net sales and earnings,
as well as the operating losses incurred throughout the 1998 year. The 1997
effective tax rate was higher than the federal statutory income tax rate
primarily due to state taxes, the effects of foreign earnings and dividends
taxed at other rates and the impact of providing a valuation allowance on
deferred tax assets.

In 1998, the Company prepaid debt assumed in the acquisitions and prepaid an
industrial revenue bond related to its Hattiesburg facility. The debt assumed in
connection with the Coleman acquisition was repaid as a result of the
requirements under the terms of the Company's Credit Facility. In connection
with these early extinguishments of debt, the Company recognized an
extraordinary charge of $122.4 million, consisting of redemption premiums
($106.9 million), unamortized debt discount ($13.8 million) and unamortized
deferred financing costs ($1.7 million).

The Company's discontinued furniture business, which was sold in March 1997, had
revenues of $51.6 million in the first quarter of 1997 prior to the sale and
nominal earnings for that period. As a result of the sale of the Company's
furniture business assets (primarily inventory, property, plant and equipment),
the Company received $69.0 million in cash, retained approximately $50 million
in accounts receivable and retained some liabilities. The final purchase price
for the furniture business was subject to a post-closing adjustment based on the
terms of the sale agreement and in the first quarter of 1997, after completion
of the sale, the Company recorded an additional loss on disposal of $14.0
million net of applicable income tax benefits of $8.5 million.

At December 28, 1997, the Company had $3.0 million of warranty liabilities
related to the discontinued furniture operations. During 1999 and 1998, $0.2
million and $2.5 million of this liability was liquidated, respectively.

FOREIGN OPERATIONS

Approximately 80% of the Company's business is conducted in U.S. dollars,
including domestic sales, U.S. dollar denominated export sales, primarily to
Latin American markets, Asian sales and the majority of European sales. The
Company's non-U.S. dollar denominated sales are made principally by subsidiaries
in Europe, Canada, Japan, Latin America and Mexico. Mexico reverted to a
hyperinflationary status for accounting purposes in 1997; therefore, translation
adjustments related to Mexican net monetary assets are included as a component
of net (loss) earnings. Mexico is no longer considered hyperinflationary as of
January 1, 1999. This change in Mexico's hyperinflationary status did not have a
material effect on the Company's financial results. Translation adjustments
resulting from the Company's non-U.S. denominated subsidiaries have not had a
material impact on the Company's financial condition, results of operations or
cash flows.

While revenues generated in Asia have traditionally not been significant,
economic instability in this region is expected to have a negative effect on
earnings. Economic instability and the political environment in Latin America
have also affected sales in that region. It is anticipated that sales in and
exports to these regions will continue to decline so long as the economic
environments in those regions remain unsettled.

On a limited basis, the Company selectively uses derivatives, primarily foreign
exchange option and forward contracts, to manage foreign exchange exposures that
arise in the normal course of business. No derivative contracts are entered into
for trading or speculative purposes. The use of derivatives has not had a
material impact on the Company's financial results. See Note 4 of Notes to
Consolidated Financial Statements.

EXPOSURE TO MARKET RISK

QUALITATIVE INFORMATION

The Company uses a variety of derivative financial instruments to manage its
foreign currency and interest rate exposures. The Company does not speculate on
interest rates or foreign currency rates. Instead, it uses derivatives when
implementing its risk management strategies to reduce the possible effects of
these exposures.

With respect to foreign currency exposures, the Company is most vulnerable to
changes in rates between the United States dollar/Japanese yen, Canadian dollar,
German deutschemark, Mexican peso and Venezuelan bolivar exchange rates. The
Company principally uses forward and option contracts to reduce risks arising
from firm commitments, intercompany sales transactions and intercompany
receivable and payable balances. The Company generally uses interest rate swaps
and caps to fix some of its variable rate debt. The Company manages credit risk
related to these derivative contracts through credit approvals, exposure limits
and threshold amounts and other monitoring procedures.

QUANTITATIVE INFORMATION

Below are tables of information related to the Company's investments in market
risk sensitive instruments. All of the instruments in the following tables have
been entered into by the Company for purposes other than trading purposes.

INTEREST RATE SENSITIVITY. The table below provides information about the
Company's derivative financial instruments and other financial instruments that
are sensitive to changes in interest rates, including interest rate swaps,
interest rate caps and debt obligations.

For debt obligations, the table presents principal cash flows by expected
maturity date and related (weighted) December 31, 1999 average interest rates.
Included in the debt position are the debentures, which carry no intervening
cash flows but mature in 2018. For interest rate derivatives, the table presents
notional amounts and weighted average interest rates for the contracts at the
current time. Notional amounts are used to calculate the contractual payments to
be exchanged under the contracts.

EXPECTED MATURITY DATE
----------------------
DECEMBER 31, FAIR
1999 2000 2001 2002 2003 2004 THEREAFTER TOTAL VALUE(1)
------ ------ ------ ------ ------ ------ ------ ------ ------
(US $EQUIVALENT IN MILLIONS)

Domestic and foreign liabilities
Debentures(2) ............... $ 819 $ -- $ -- $ -- $ -- $ -- $2,014 $2,014 $ 310
Other ....................... 10 1 1 1 1 1 5 10 8
------ ------ ------ ------ ------ ------ ------ ------ ------
Total fixed rate debt (US$) . $ 829 $ 1 $ 1 $ 1 $ 1 $ 1 $2,019 $2,024 $ 318
Average interest rate ....... 4.99%
Variable rate debt (US$)(3).. $1,475 $ 138 $1,337 $ -- $ -- $ -- $ -- $1,475 $1,475
Average interest rate ....... 8.86%
Interest Rate Derivatives
Interest rate swaps:
Variable to fixed (US$) .. $ 325 $ -- $ 150 $ -- $ 175 $ -- $ -- $ 325 $ 2.5
Average pay rate ......... 5.70%
Average receive rate ..... 5.23%
Interest rate cap:
Notional amount (US$) .... $ 455 $ -- $ 455 $ -- $ -- $ -- $ -- $ 455 $ 0.9
Cap rate ................. 6.5%

(1) The fair value of fixed rate debt is estimated using either reported
transaction values or discounted cash flow analysis. The carrying value
of variable rate debt is assumed to approximate market value based on
the periodic adjustments of the interest rates to the current market
rates in accordance with the terms of the agreements. The fair value of
the interest rate derivatives is based on estimates of the cost of
terminating the swap and interest rate cap agreements.

(2) The total amount of debentures maturing in future periods exceeds the
balance as of December 31, 1999 due to the accretion of the original
issue discount related to the debentures. See Note 3 of Notes to
Consolidated Financial Statements.

(3) Represents Credit Facility debt and foreign lines of credit. See Item 7
"--Liquidity and Capital Resources" and Note 3 of Notes to Consolidated
Financial Statements.

EXCHANGE RATE SENSITIVITY. In order to mitigate the transaction exposures that
may arise from changes in foreign exchange rates, the Company purchases foreign
currency option and forward contracts to hedge specific transactions,
principally the purchases of inventories. The option contracts typically expire
within one year. The options are accounted for as hedges pursuant to SFAS No.
52, Foreign Currency Translation, accordingly gains and losses thereon are
deferred and recorded in operations in the period in which the underlying
transaction is recorded. The contracts are off-balance-sheet and therefore have
no carrying value. At December 31, 1999, the Company held no purchased option
contracts or forward contracts. At December 31, 1998, the Company held purchased
options contracts with a notional value of $32.3 million and a fair value of
$0.3 million and forward contracts with a notional amount of $30.9 million and a
fair value of $30.5 million.

EURO CONVERSION

On January 1, 1999, certain member countries of the European Union established
fixed conversion rates between their existing currencies and the European
Union's common currency (the "Euro"). The transition period for the introduction
of the Euro is between January 1, 1999 and January 1, 2002. The Company has been
preparing for the introduction of the Euro and continues to evaluate and address
the many issues involved, including the conversion of information technology
systems, recalculating currency risk, strategies concerning continuity of
contracts, and impacts on the processes for preparing taxation and accounting
records. Based on the work to date, the Company believes the Euro conversion
will not have a material impact on its results of operations.

SEASONALITY

Sunbeam's consolidated sales are not expected to exhibit substantial
seasonality; however, sales are expected to be strongest during the second
quarter of the calendar year and weakest in the first quarter. Furthermore,
sales of a number of products, including warming blankets, vaporizers,
humidifiers, grills, First Alert products, camping and generator products may be
impacted by unseasonable weather conditions.

LIQUIDITY AND CAPITAL RESOURCES

DEBT INSTRUMENTS

In order to finance the acquisition of Coleman, First Alert and Signature Brands
and to refinance substantially all of the indebtedness of Sunbeam and the three
acquired companies, the Company consummated an offering of debentures at a yield
to maturity of 5% of approximately $2,014 million principal amount at maturity,
in March 1998, which resulted in approximately $730 million of net

proceeds and borrowed about $1,325 million under its Credit Facility.

The debentures are exchangeable for shares of the Company's common stock at an
initial conversion rate of 6.575 shares for each $1,000 principal amount at
maturity of the debentures, subject to adjustments upon occurrence of specified
events. The debentures are subordinated in right of payment to all existing and
future senior indebtedness of the Company. The debentures are not redeemable by
the Company prior to March 25, 2003. On or after such date, the debentures are
redeemable for cash with at least 30 days notice, at the option of the Company.
The Company is required to purchase debentures at the option of the holder as of
March 25, 2003, March 25, 2008 and March 25, 2013, at purchase prices equal to
the issue price plus accrued original discount to such dates. The Company may,
at its option, elect to pay any such purchase price in cash or common stock or
any combination thereof. However, the Credit Facility prohibits the Company from
redeeming or repurchasing debentures for cash. The Company was required to file
a registration statement with the SEC to register the debentures by June 23,
1998. This registration statement was filed on February 4, 1999 and, as amended,
was declared effective on November 8, 1999. The Company's failure to file the
registration statement by June 23, 1998 did not constitute default under the
terms of the debentures. From June 23, 1998 until the registration statement was
declared effective, the Company was required to pay to the debenture holders
cash liquidated damages accruing, for each day during such period, at a rate per
annum equal to 0.25% during the first 90 days and 0.50% thereafter multiplied by
the total of the issue price of the debentures plus the original issue discount
thereon on such day. The Company has made total payments for liquidated damages
since June 23, 1998 of $4.5 million, of which $3.0 million and $1.5 million
related to damages for the years ended December 31, 1999 and 1998, respectively.

Concurrent with the acquisitions of Coleman, First Alert and Signature Brands,
the Company replaced its $250 million syndicated unsecured five-year revolving
credit facility with the Credit Facility. The Credit Facility provided for
aggregate borrowings of up to $1.7 billion and in addition to other customary
covenants, required the Company to maintain specified consolidated leverage,
interest coverage and fixed charge coverage ratios as of the end of each fiscal
quarter occurring after March 31, 1998 and on or prior to the latest stated
maturity date for any of the borrowings under the Credit Facility.

As a result of, among other things, its operating losses incurred during the
first half of 1998, the Company did not achieve certain financial ratios
for June 30, 1998 and it appeared unlikely that the Company would achieve the
specified financial ratios for September 30, 1998. Consequently, the Company and
its lenders entered into an agreement dated as of June 30, 1998 that waived
through December 31, 1998 all defaults arising from the failure of the Company
to satisfy the specified financial ratios for June 30, 1998 and September 30,
1998. Pursuant to an agreement with the Company dated as of October 19, 1998,
the Company's lenders extended all of the waivers under the June 30 agreement
through April 10, 1999 and also waived through such date all defaults arising
from any failure by the Company to satisfy the specified financial ratios for
December 31, 1998. In April 1999, such waivers were extended through April 10,
2000 and on April 10, 2000 such waivers were extended through April 14, 2000.

On April 14, 2000, the Company and its lenders entered into an amendment to the
Credit Facility that, among other things, waived until April 10, 2001 all
defaults arising from any failure by the Company to satisfy certain financial
ratios for any fiscal quarter end occurring through March 31, 2001. As part of
the April 14, 2000 amendment, the Company agreed to a minimum cumulative
earnings before interest, taxes, depreciation and amortization ("EBITDA")
covenant that is based on consolidated EBITDA and is tested at the end of each
month occurring on or prior to March 31, 2001. The minimum cumulative EBITDA is
initially $35.8 million for the period from January 1, 2000 through April 30,
2000 and generally increases on a monthly basis until it reaches $213.6 million
for the period from January 1, 2000 through March 31, 2001. The following
description of the Credit Facility reflects the significant terms of the Credit
Facility as amended to date.

The Credit Facility provides for aggregate borrowings of up to $1.7 billion
through:

/bullet/ a revolving credit facility in an aggregate principal amount
of up to $400.0 million maturing March 30, 2005, $52.5 million
of which was used to complete the Coleman merger which
occurred on January 6, 2000;

/bullet/ up to $800.0 million in term loans maturing on March 30, 2005,
of which $35.0 million was used to complete the Coleman merger
which occurred on January 6, 2000; and

/bullet/ a $500.0 million term loan maturing September 30, 2006 of
which $5.0 million has been repaid.

As of December 31, 1999, $1.4 billion was outstanding and $0.2 billion was
available for borrowing under the Credit Facility. The remaining $0.1 billion of
the $1.7 billion Credit Facility was committed for outstanding letters of
credit.

Under the Credit Facility, interest accrues, at the Company's option:

/bullet/ at the London Interbank Offered Rate ("LIBOR"); or

/bullet/ at the base rate of the administrative agent which is
generally the higher of the prime commercial lending rate of
the administrative agent or the Federal Funds Rate plus 0.50%;

in each case plus an interest margin which was 4.00% for LIBOR borrowings and
2.50% for base rate borrowings as of December 31, 1999. The applicable interest
margin was reduced to 3.00% for LIBOR borrowings and 1.75% for base rate
borrowings on January 6, 2000, concurrent with the effective date of the Coleman
merger. The applicable interest margin is subject to further downward adjustment
upon the reduction of the aggregate borrowings under the Credit Facility.

Under terms of the April 14, 2000 amendment to the Credit Facility, the Company
is obligated to pay the bank lenders an amendment fee for the April 14, 2000
amendment of 0.50% of the commitments under the Credit Facility as of April 14,
2000, totaling $8.5 million, which is payable on the earlier of June 30, 2000 or
the closing of the sale of Eastpak. On November 30, 2000, the Company must also
pay an amendment fee previously agreed to for the April 15, 1999 amendment equal
to 0.50% of the commitments under the Credit Facility as of April 15, 1999,
totaling $8.5 million. An additional amendment fee relating to the April 15,
1999 amendment equal to $8.5 million, will be payable to the bank lenders if the
aggregate loan and commitments exposure under the Credit Facility is equal to or
more than $1.2 billion on November 30, 2000, with such fee being payable on June
30, 2001. The $17 million amendment fee associated with the April 15, 1999
amendment is being amortized to interest expense using the straight-line method
over the one year term of the amendment. The $8.5 million amendment fee
associated with April 14, 2000 amendment will be amortized to interest expense
using the straight-line method over the one year term of that amendment. See
Note 3 of Notes to Consolidated Financial Statements.

Borrowings under the Credit Facility are secured by a pledge of the stock of the
Company's material subsidiaries and by a security interest in substantially all
of the assets of the Company and its material domestic subsidiaries. In
addition, borrowings under the Credit Facility are guaranteed by a number of the
Company's wholly-owned material domestic subsidiaries and these subsidiary
guarantees are secured as described above. To the extent extensions of credit
are made to any subsidiaries of the Company, the obligations of such
subsidiaries are guaranteed by the Company.

In addition to the above described financial ratios and tests, the Credit
Facility contains covenants customary for credit facilities of a similar nature,
including limitations on the ability of the Company and its subsidiaries, to,
among other things:

/bullet/ declare dividends or repurchase stock;
/bullet/ prepay, redeem or repurchase debt, incur liens and engage in
sale-leaseback transactions;
/bullet/ make loans and investments;
/bullet/ incur additional debt;
/bullet/ amend or otherwise alter material agreements or enter into
restrictive agreements;
/bullet/ make capital expenditures;
/bullet/ fail to maintain its trade receivable securitization programs;
/bullet/ engage in mergers, acquisitions and asset sales;
/bullet/ engage in certain transactions with affiliates;
/bullet/ settle certain litigation;
/bullet/ alter its cash management system; and
/bullet/ alter the businesses they conduct.

The Credit Facility provides for events of default customary for transactions of
this type, including nonpayment, misrepresentation, breach of covenant,
cross-defaults, bankruptcy, material adverse change arising from compliance with
ERISA, material adverse judgments, entering into guarantees and change of
ownership and control. Furthermore, the Credit Facility requires the Company to
prepay loans under the Credit Facility on December 31, 2000 to the extent that
cash on hand in the Company's concentration accounts plus the aggregate amount
of unused revolving loan commitments on that date exceed $185.0 million.

Unless waived by the bank lenders, the failure of the Company to satisfy any of
the financial ratios and tests contained in the Credit Facility or the
occurrence of any other event of default under the Credit Facility would entitle
the bank lenders to (a) receive a 2.00% increase in the interest rate applicable
to outstanding loans and increase the trade letter of credit fees to 1.00% and
(b) accelerate the maturity of the outstanding borrowings under the Credit
Facility and exercise all or any of their other rights and remedies. Any such
acceleration or other exercise of rights and remedies would likely have a
material adverse effect on the Company.

Pursuant to the April 14, 2000 amendment, the term loan payments originally
scheduled for September 30, 1999 and March 31, 2000, in the amount of $69.3
million on each date are now payable as follows: (i) $69.3 million on the
earlier of the sale of Eastpak or

August 15, 2000, (ii) $30.8 million on November 30, 2000 and (iii) $38.5 million
on April 10, 2001. In addition, the April 14, 2000 amendment provides that the
payment dates for the $69.3 million term loan payments originally scheduled for
each of September 30, 2000 and March 31, 2001 are deferred until April 10, 2001.
See Note 3 of Notes to Consolidated Financial Statements.

CASH FLOWS

As of December 31, 1999, Sunbeam had cash and cash equivalents of $ 40.8 million
and total debt of $2.3 billion. Cash used for operating activities was $4.3
million, $190.4 million and $6.0 million in 1999, 1998 and 1997, respectively.
The improvement in cash used for operations in 1999 as compared to 1998 is
primarily attributable to improved earnings after giving effect to non-cash
charges and working capital improvements. The majority of the working capital
improvements are attributable to the Company's cash management efforts,
particularly relating to inventory levels and accounts payable. Inventory levels
decreased approximately $49 million in 1999 as compared to 1998, reflecting the
Company's continuing effort to reduce inventory to appropriate levels. Accounts
payable increased approximately $29 million in 1999 as compared to a decrease of
$68 million in 1998. These improvements in operating cash flow are partially
offset by decreases in current liabilities and non-operating liabilities of
approximately $6 million, primarily attributable to pension funding, payments
for post employment benefits and payments relating to environmental and
litigation matters. The increase in cash used in operations in 1998 as compared
to 1997 is driven by a decrease in cash generated by earnings, after giving
effect to non-cash charges in 1998, the use of $68 million cash to reduce
payables partially offset by decreases in cash used for inventory as a result of
the Company's management of inventory levels during the second half of 1998.
Cash used in operating activities reflects proceeds of approximately $60 million
in 1999 and approximately $20 million in 1998 from the Company's revolving trade
accounts receivable securitization program at December 31, 1999 and 1998,
respectively.

Cash used in investing activities was $84.5 million and $566.7 million in 1999
and 1998, respectively. Capital spending totaled $90.2 million in 1999 and was
primarily for information systems, including expenditures for Year 2000
readiness, equipment and tooling for new products and the expansion of the
Company's Neosho, Missouri warehouse. Cash used for investing activities during
1999 reflects the $4.8 million payment made to cash out Coleman employee stock
options in connection with the Coleman merger. See Note 2 of Notes to
Consolidated Financial Statements. Cash used for investing activities in 1998
reflects $522.4 million for the acquisitions of Coleman, First Alert and
Signature Brands. Capital spending totaled $53.7 million in 1998 and was
primarily for manufacturing efficiency initiatives, equipment and tooling for
new products, and management information systems hardware and software licenses.
The new product capital spending principally related to the air and water
filtration products which were discontinued in the second quarter of 1998,
electric blankets, grills, clippers and appliances. In 1997, cash provided by
investing activities of $30.4 million reflected $91.0 million in proceeds from
the sales of divested operations and other assets. Capital spending in 1997 was
$60.5 million and was primarily attributable to manufacturing capacity
expansion, cost reduction initiatives and equipment to manufacture new products.
The new product capital spending in 1997 principally related to appliances and
included costs related to blenders, toasters, stand mixers, slow cookers and a
soft serve ice cream product. The Company estimates that capital expenditures
for 2000 will be approximately $80 million.

Cash provided by financing activities of $68.2 million in 1999 reflects net
borrowings under the Credit Facility of $76.0 million. Cash provided by
financing activities totaled $766.2 million in 1998 and reflects the net
proceeds from the sale of debentures of $729.6 million, the cancellation and
repayment of all outstanding balances under the Company's $250 million September
1996 revolving credit facility, the repayment of debt in connection with the
acquisitions, the early extinguishment of the $75.0 million Hattiesburg
industrial revenue bond and net borrowings under the Credit Facility. In
addition, cash provided by financing activities during 1998 includes $19.6
million of proceeds from the exercise of stock options. During 1997, cash
provided by financing activities of $16.4 million reflected net borrowings of
$5.0 million under the Company's September 1996 revolving credit facility, $12.2
million of debt repayments related to the divested furniture business and other
assets sold and $26.6 million in cash proceeds from the exercise of stock
options.

In December 1997, the Company entered into a revolving trade accounts receivable
securitization program, which as amended expires in March 2001, to sell without
recourse, through a wholly-owned subsidiary, up to a maximum of $70 million in
trade accounts receivable. In March 2000, the Company entered into an amendment
to such receivables program to increase this program to $100 million. The
Company, as agent for the purchaser of the receivables, retains collection and
administrative responsibilities for the purchased receivables. For the year
ended December 31, 1999 and 1998, the Company sold approximately $350 million
and $200 million, respectively, of accounts receivable under this program. At
December 31, 1999 and 1998, the Company had reduced accounts receivable by
approximately $60 million and approximately $20 million, respectively, for
receivables sold under this program. The Company expects to continue to utilize
the securitization program to finance a portion of its accounts receivable. In
April 2000, the Company's Coleman and Powermate subsidiaries entered into an
additional revolving trade accounts receivable securitization program to sell,
without recourse, through a wholly-owned subsidiary of Coleman, up to a maximum
of $95 million in trade accounts receivables. These trade accounts receivable
programs contain cross-default provisions that provide the purchaser of the
receivables an option to cease purchasing receivables from the Company if the
Company is in default under the Credit Facility. In addition, the

agreement contains various other covenants customary for these types of
programs, including financial covenants. See Note 5 of Notes to Consolidated
Financial Statements.

At December 31, 1999, standby and commercial letters of credit aggregated $79.7
million and were predominately for insurance, workers' compensation, and
international trade activities. In addition, as of December 31, 1999, surety
bonds with a contract value of $67.5 million were outstanding to secure certain
pension plan obligations and as a result of environmental issues and litigation
judgments that are currently under appeal.

For additional information relating to the debentures, the Credit Facility and
the repayment of debt, see Note 3 of Notes to Consolidated Financial Statements.

In January 2000, pursuant to a merger agreement dated as of February 27, 1998,
the Company acquired the remaining publicly held Coleman shares pursuant to a
merger transaction which provided that the remaining Coleman stockholders (other
than stockholders who are seeking appraisal rights under Delaware law) receive
0.5677 of a share of the Company's common stock and $6.44 in cash for each share
of Coleman common stock they owned, aggregating approximately 6.7 million shares
of the Company's common stock and $87 million in cash. The approximate $87
million aggregate cash payment included $4.8 million related to the cash out of
remaining Coleman employee options, in accordance with the merger agreement,
which occurred in December 1999. In addition, pursuant to a court approved
settlement of claims by Coleman public stockholders the Company issued to such
stockholders (other than such stockholders who are seeking appraisal rights
under Delaware law), warrants expiring August 24, 2003 to purchase 4.98 million
shares of the Company's common stock at $7.00 per share less approximately
498,000 warrants issued to the plaintiffs' attorneys for their fees and
expenses. These warrants, which generally have the same terms as the warrants
previously issued to M&F's subsidiary, were issued when the consideration was
paid for the Coleman merger. The total consideration given for the purchase of
the remaining publicly held Coleman shares was valued at $146 million.

The Company believes its borrowing capacity under the Credit Facility, foreign
working capital lines, cash flow from the operations of the Company, existing
cash and cash equivalent balances, proceeds from its receivable securitization
programs, the sale of Eastpak and sales of non-core assets will be sufficient to
support planned working capital needs, planned capital expenditures and
scheduled debt service through April 10, 2001. In the fourth quarter of 1999,
the Company announced its intention to divest Eastpak and certain non-core
assets. The Company intends to use the net proceeds from the sale of Eastpak,
which is expected to close in the second quarter of 2000, as well as other asset
sales, to satisfy a portion of scheduled 2000 principal and fee payments under
the Credit Facility. Although management believes they will be successful in
accomplishing the above, there can be no assurance that the combination of funds
from the Credit Facility, foreign working capital lines, cash flow from
operations, receivable securitization programs, and asset sales will be
sufficient to meet the Company's cash requirements on a consolidated basis. If
the Company is unable to satisfy such cash requirements, the Company could be
required to adopt one or more alternatives, such as reducing or delaying capital
expenditures, restructuring indebtedness, selling other assets or operations or
issuing additional shares of capital stock in the Company. There can be no
assurance that any of such actions could be effected, or if so, on terms
favorable to the Company, that they would enable the Company to continue to
satisfy its cash requirements or that they would be permitted under the terms of
the Credit Facility. In anticipation of the expiration of the current waiver on
April 10, 2001, the Company intends to negotiate with its lenders on an
amendment to the Credit Facility, negotiate with its lenders on further waiver
of such covenants and other terms or refinance the Credit Facility. Any
decisions with respect to such amendment, waiver, or refinancing will be made
based on a review from time to time of the advisability of particular
transactions. There can be no assurance that an amendment, further waiver of
existing covenants and other terms, or refinancing will be entered into by April
10, 2001. The failure to obtain such an amendment, further waiver or debt
refinancing would likely result in violation of existing covenants and
compliance with other terms, which would permit the bank lenders to accelerate
the maturity of all outstanding borrowings under the Credit Facility, which
would likely have a material adverse effect on the Company.

By letter dated June 17, 1998, the staff of the Division of Enforcement of the
SEC advised the Company that it was conducting an informal inquiry into the
Company's accounting policies and procedures and requested that the Company
produce certain documents. On July 2, 1998, the SEC issued a Formal Order of
Private Investigation, designating SEC officers to take testimony and pursuant
to which a subpoena was served on the Company requiring the production of
documents. On November 4, 1998, the Company received another SEC subpoena
requiring the production of additional documents. The Company has provided
numerous documents to the SEC staff and continues to cooperate with the SEC
staff. The Company has however, declined to provide the SEC with material that
the Company believes is subject to the attorney-client privilege and the work
product immunity. The SEC has not commenced any civil or administrative
proceedings as a result of its investigation, and the Company cannot predict at
this time whether the SEC will seek to impose any monetary or other penalties
against the Company. Under these circumstances, the Company cannot estimate the
duration of the investigation or its outcome.

The Company is involved in significant litigation, including class and
derivative actions, relating to events which led to the restatement of its
consolidated financial statements, the issuance of the M&F warrant, the sale of
the debentures and the 1998 Employment Agreements of Messrs. Dunlap and Kersh.
The Company intends to vigorously defend each of the actions, but cannot predict
the outcome and is not currently able to evaluate the likelihood of the
Company's success in each case or the range of potential

loss. However, if the Company were to lose these suits, the resulting judgments
would likely have a material adverse effect on the Company's financial position,
results of operations or cash flows. Additionally, the Company's insurance
carriers, on the one hand, and the Company on the other, have filed various
suits against each other requesting a declaratory judgment on the validity of
the directors' and officers' liability insurance policies or have advised the
Company of their intent to deny coverage under such policies. The Company is
defending these claims and pursuing recovery from its insurers. See Item 3 --
"Legal Proceedings". The Company's failure to obtain such insurance recoveries
following an adverse judgment against the Company on any of the foregoing
actions could have a material adverse effect on the Company's financial
position, results of operations or cash flows.

Amounts accrued for litigation matters represent the anticipated costs (damages
and/or settlement amounts) in connection with pending litigation and claims and
related anticipated legal fees for defending such actions. The costs are accrued
when it is both probable that an asset has been impaired or a liability has been
incurred and the amount can be reasonably estimated. The accruals are based upon
the Company's assessment, after consultation with counsel, of probable loss
based on the facts and circumstances of each case, the legal issues involved,
the nature of the claim made, the nature of the damages sought and any relevant
information about the plaintiffs, and other significant factors which vary by
case. When it is not possible to estimate a specific expected cost to be
incurred, the Company evaluates the range of probable loss and records the
minimum end of the range. As of December 31, 1999, the Company had established
accruals for litigation matters of $24.3 million (representing $9.6 million and
$14.7 million for estimated damages or settlement amounts and legal fees,
respectively) and $31.2 million as of December 31, 1998, (representing $17.5
million and $13.7 million for estimated damages or settlement amounts and legal
fees, respectively). It is anticipated that the $24.3 million accrual will be
paid as follows: $20.8 million in 2000, $3.4 million in 2001, and $0.1 million
in 2002. The Company believes, based on information available on December 31,
1999, that anticipated probable costs of litigation matters existing as of
December 31, 1999 have been adequately reserved to the extent determinable.

As a consumer goods manufacturer and distributor, the Company faces the constant
risks of product liability and related lawsuits involving claims for substantial
money damages, product recall actions and higher than anticipated rates of
warranty returns or other returns of goods. These claims could result in
liabilities that could have a material adverse effect on the Company's financial
position, results of operations or cash flows. Some of the product lines the
Company acquired in the 1998 acquisitions have increased its exposure to product
liability and related claims.

The Company and its subsidiaries are also involved in various lawsuits from time
to time that the Company considers to be ordinary routine litigation incidental
to its business. In the opinion of the Company, the resolution of these routine
matters, and of certain matters relating to prior operations, individually or in
the aggregate, will not have a material adverse effect on the financial
position, results of operations or cash flows of the Company.

For additional information relating to litigation, see Item 3--"Legal
Proceedings".

NEW ACCOUNTING STANDARDS

Effective January 1, 1999, the Company adopted Statement of Position 98-1,
ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL
USE ("SOP 98-1"). SOP 98-1 requires computer software costs associated with
internal use software to be expensed as incurred until certain capitalization
criteria are met. Adoption of this statement did not have a material impact on
the Company's consolidated financial position, results of operations, or cash
flows.

In June 1999, the FASB issued SFAS No. 137, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES-DEFERRAL OF THE EFFECTIVE DATE OF STATEMENT
NO. 133, which delays the effective date of Statement No. 133 to fiscal years
beginning after June 15, 2000. SFAS No. 133 requires the recognition of all
derivatives in the Consolidated Balance Sheets as either assets or liabilities
measured at fair value. The Company will adopt SFAS No. 133 for the 2001 fiscal
year. The Company has not yet determined the impact SFAS No. 133 will have on
its consolidated financial position, results of operations or cash flows.

YEAR 2000 DISCLOSURE

As a result of the Company's readiness planning, systems corrections and testing
as well as the contingency plans that were developed, the Company was adequately
prepared for the impact of Year 2000 on its operations and experienced no major
Year 2000 issues. The Company initiated a global contingency planning effort to
support the Company's critical business operations. Critical sites were
identified worldwide, and local procedures were developed to maintain business
continuity if a Year 2000 issue should have arisen. For example, this included
having identified disaster-recovery facilities, alternative suppliers,
stockpiling critical materials or having a documented manual procedure.
Additionally, the Company established a Year 2000 Command Center to deal with
unexpected Year 2000 issues and possible disruptions as they occurred. The Year
2000 executive team, with worldwide coordination and oversight by the corporate
Project Management Office oversaw these efforts.

THE COSTS TO ADDRESS SUNBEAM'S YEAR 2000 ISSUES

Through December 31, 1999, including costs incurred in 1998, the Company had
expended approximately $67 million to address Year 2000 issues of which
approximately 50% was recorded as capital expenditures and the remainder as SG&A
expense. The Company does not expect to incur material additional costs related
to Year 2000.

The $67 million expenditure includes the following categories:

/bullet/ uniform international business and accounting system $47 million

/bullet/ localized business system software upgrades and remediation $9 million

/bullet/ Year 2000 readiness assessment and tracking $6 million

/bullet/ upgrade of personal computers and related software $5 million

The amount incurred for Year 2000 issues during 1999 of approximately $48
million represented over 50% of the Company's total 1999 budget for information
systems and related support, including Year 2000 costs. A majority of these
costs were incremental expenditures that will not recur in the Year 2000 or
thereafter. Fees and expenses related to third party consultants, who were
involved in the program management office as well as the modification and
replacement of software, represented approximately 75% of the total cost. The
balance of the total cost related primarily to software license fees and new
hardware, but excluded the costs associated with company employees. The Company
financed these expenditures through operating cash flows or borrowings, as
applicable. A significant portion of these expenditures enhanced the Company's
operating systems in addition to resolving Year 2000 issues.

Because Year 2000 readiness was critical to the business, the Company redeployed
some resources from non-critical system enhancements to address Year 2000
issues. In addition, due to the importance of information technology systems to
the Company's business, management deferred non-critical systems enhancements as
much as possible. These redeployments and deferrals did not have a material
impact on the Company's financial condition, results of operations or cash
flows.

EFFECTS OF INFLATION

For each of the three years in the period ended December 31, 1999 the Company's
cost of raw materials and other product remained relatively stable. To the
extent possible, the Company's objective is to offset the impact of inflation
through productivity enhancements, cost reductions and price increases.

CAUTIONARY STATEMENTS

Certain statements in this Annual Report on Form 10-K may constitute
"forward-looking" statements within the meaning of the Private Securities
Litigation Reform Act of 1995, as the same may be amended from time to time (the
"Act") and in releases made by the SEC. These forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance, or achievements of the Company to be materially
different from any future results, performance, or achievements expressed or
implied by such forward-looking statements. Statements that are not historical
fact are forward-looking statements. Forward-looking statements can be
identified by, among other things, the use of forward-looking language, such as
the word "estimate," "project," "intend," "expect," "believe," "may," "well,"
"should," "seeks," "plans," "scheduled to," "anticipates," or "intends," or the
negative of these terms or other variations of these terms or comparable
language, or by discussions of strategy or intentions, when used in connection
with the Company, including its management. These forward-looking statements
were based on various factors and were derived utilizing numerous important
assumptions and other important factors that could cause actual results to
differ materially from those in the forward-looking statements. These cautionary
statements are being made pursuant to the Act, with the intention of obtaining
the benefits of the "safe harbor" provisions of the Act. The Company cautions
investors that any forward-looking statements made by the Company are not
guarantees of future performance. Important assumptions and other important
factors that could cause actual results to differ materially from those in the
forward-looking statements with respect to the Company include, but are not
limited to, risks associated with:

/bullet/ high leverage;

/bullet/ the Company's ability to continue to have access to its
revolving credit facility including the Company's ability to
(I) comply with the terms of its Credit Facility, including
financial covenants, (ii) enter into an amendment to its
credit agreement containing financial covenants which it and
its bank lenders find mutually acceptable, or (III) continue
to obtain waivers from its bank lenders with respect to its
compliance with the existing covenants contained in the Credit
Facility;

/bullet/ the prices at which the Company is able to sell receivables
under its trade accounts receivables securitization programs
and/or the Company's ability to continue to sell receivables
under either of such programs;

/bullet/ the Company's ability to refinance its indebtedness, including
the Credit Facility and/or the Debentures, at acceptable rates
with acceptable other terms;

/bullet/ the Company's ability to consummate the sale of Eastpak
pursuant to the Eastpak Sale Agreement;

/bullet/ the Company's ability to consummate the sale of non-core
assets and if consummated, the terms of such sales;

/bullet/ the Company's ability to continue to have access to foreign
working capital lines;

/bullet/ the Company's ability to fully integrate the recently acquired
Coleman, Signature Brands and First Alert companies and
expenses associated with such integration;

/bullet/ the Company's sourcing of products from international vendors,
including the ability to select reliable vendors and to avoid
delays in shipments;

/bullet/ the Company's ability to maintain and increase market share
for its products at acceptable margins;

/bullet/ the Company's ability to successfully introduce new products
and to provide on-time delivery and a satisfactory level of
customer service;

/bullet/ changes in domestic and/or foreign laws and regulations,
including changes in tax laws, accounting standards,
environmental laws, occupational, health and safety laws;

/bullet/ access to foreign markets together with foreign economic
conditions, including currency fluctuations and trade,
monetary and/or tax policies;

/bullet/ uncertainty as to the effect of competition in existing and
potential future lines of business;

/bullet/ fluctuations in the cost and availability of raw materials
and/or products;

/bullet/ changes in the availability and costs of labor;

/bullet/ effectiveness of advertising and marketing programs;

/bullet/ economic uncertainty in Japan, Korea and other Asian
countries, as well as in Mexico, Venezuela, and other Latin
American countries;

/bullet/ product quality, including excess warranty costs;

/bullet/ product liability expenses consisting of insurance, litigation
fees and damages and/or settlement costs, as well as other
costs including Sunbeam's First Alert subsidiary and costs
including legal fees and penalties (if any) and lost business
and/or goodwill of product recalls;

/bullet/ weather conditions which can have an unfavorable impact upon
sales of certain of the Company's products;

/bullet/ the numerous lawsuits against the Company and the SEC
investigation into the Company's accounting practices and
policies, and uncertainty regarding the Company's available
coverage under its directors' and officers' liability
insurance;

/bullet/ the possibility of a recession in the United States or other
countries resulting in a decrease in consumer demands for the
Company's products;

/bullet/ actions by competitors including business combinations, new
product offerings and promotional activities; and

Other factors and assumptions not included in the list above may also cause the
Company's actual results to materially differ from those projected.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The response to this item appears in Item 14(a) of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

On November 20, 1998, the audit committee recommended and Sunbeam's board
approved the appointment of Deloitte & Touche as its independent auditors for
1998, to replace Arthur Andersen, Sunbeam's former auditor. Arthur Andersen is
continuing to provide certain professional services to Sunbeam.

On June 25, 1998, Sunbeam announced that Arthur Andersen would not consent to
the inclusion of its opinion on Sunbeam's 1997 financial statements in a
registration statement Sunbeam was planning to file with the SEC. On June 30,
1998, Sunbeam announced that the audit committee of its board of directors would
conduct a review of Sunbeam's prior financial statements and that, therefore,
those financial statements should not be relied upon. Sunbeam also announced
that Deloitte & Touche had been retained to assist the audit committee and
Arthur Andersen in their review of Sunbeam's prior financial statements. On
August 6, 1998, Sunbeam announced that the audit committee had determined that
Sunbeam would be required to restate its financial statements for 1997, the
first quarter of 1998 and possibly 1996, and that the adjustments, while not
then quantified, would be material. On October 20, 1998 Sunbeam announced the
restatement of its financial results for a six-quarter period from the fourth
quarter of 1996 through the first quarter of 1998. On November 12, 1998, Sunbeam
filed a Form 10-K/A for the year ended December 28, 1997, which contains an
unqualified opinion by Arthur Andersen on Sunbeam's restated consolidated
financial statements as of December 29, 1996 and December 28, 1997 and for each
of the three years in the period ended December 28, 1997.

Arthur Andersen's report on Sunbeam's financial statements for the two fiscal
years of Sunbeam ended December 28, 1997 contained no adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty, audit
scope or accounting principles. In connection with its audits for those periods
and through November 20, 1998, there were no disagreements with Arthur Andersen
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements if not resolved
to the satisfaction of Arthur Andersen would have caused Arthur Andersen to make
reference thereto in their report on the financial statements for such years.
Sunbeam has not consulted with Deloitte & Touche on any matter that was either
the subject of a disagreement or a reportable event between Sunbeam and Arthur
Andersen.

In connection with the restatements referred to above, in a letter dated October
16, 1998, Arthur Andersen advised Sunbeam that there existed the following
conditions that Arthur Andersen believed to be material weaknesses in Sunbeam's
internal controls:

"In our opinion, [Sunbeam's] design and effectiveness of its
internal control were inadequate to detect material misstatements in
the preparation of [Sunbeam's] 1997 annual (before audit) and
quarterly financial statements."

As part of its audit of Sunbeam's 1997 consolidated financial statements that
led to the restatement of these financial statements, Arthur Andersen was
required to consider Sunbeam's internal controls in determining the scope of its
audit procedures. In November 1998, Arthur Andersen advised management of its
concerns regarding Sunbeam's internal controls. Management has substantially
addressed these concerns and has implemented additional internal controls
surrounding accounting processes and procedures and financial reporting.
Management believes that the Company's internal control structures will now
detect material misstatements in the Company's annual and quarterly financial
statements.

PART III

ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT

Information regarding the Company's directors is incorporated by reference to
the information set forth under "Proposal 1--To Elect the Following Eight
Directors of the Company for a Term of One Year" in the Company's Proxy
Statement for the 2000 Annual Meeting of Stockholders (the "Proxy Statement"),
which is to be filed with the SEC pursuant to Regulation 14A no later than 120
days following the end of the fiscal year reported upon. Information regarding
executive officers of the Company is included under a separate caption in Part I
hereof. Information regarding compliance with Section 16(a) of the Exchange Act
is incorporated by references to the information included under the caption
"Section 16(a) Beneficial Ownership Reporting Compliance" in the Proxy
Statement.

ITEM 11. EXECUTIVE COMPENSATION

Information regarding this item is incorporated by reference to the information
included under the captions "Executive Compensation" and "Directors'
Compensation" in the Company's Proxy Statement to be filed with the SEC pursuant
to Regulation 14A no later than 120 days following the end of fiscal year
reported upon.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information regarding this item is incorporated by reference to the information
included under the captions "Security Ownership of Certain Beneficial Owners"
and "Security Ownership of Management" in the Company's Proxy Statement to be
filed with the SEC pursuant to Regulation 14A no later than 120 days following
the end of fiscal year reported upon.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information regarding this item is incorporated by reference to the information
included under the caption "Certain Relationships and Related Transactions" in
the Company's Proxy Statement to be filed with the SEC pursuant to Regulation
14A no later than 120 days following the end of fiscal year reported upon.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1. The consolidated financial statements, related
notes thereto and the report of independent certified
public accountants required by Item 8 are listed on
page F-1 herein.

2. The listing of financial statement schedules appears
on page F-1 herein.

3. The exhibits listed in the accompanying index to
exhibits are filed as part of this report and include
the management contracts or compensatory plans or
arrangements required pursuant to Item 601 of
Regulation S-K, which are designated as Exhibits
10.ll, 21, 23.1, 23.2 and 27.

EXHIBIT
NUMBER DESCRIPTION
------ -----------
3.a Amended and Restated Certificate of Incorporation of Sunbeam(2)
3.b By-laws of Sunbeam, as amended(8)
4.a Indenture dated as of March 25, 1998, by and among the Company and
Bank of New York, Trust, with respect to the Zero Coupon Convertible
Senior Subordinated Debentures due 2018(5)
4.b Registration Rights Agreement dated March 25, 1998, by and among the
Company and Morgan Stanley & Co., Inc., with respect to the Zero
Coupon Convertible Senior Subordinated Debentures due 2018(5)
4.c Registration Rights Agreement, dated as of March 29, 1998, between
the Company and Coleman (Parent) Holdings, Inc.(6)
4.d Settlement Agreement, dated as of August 12, 1998, by and between
the Company and Coleman (Parent) Holdings, Inc.(7)
4.e Amendment to Registration Rights Agreement, dated as of August 12,
1998, between the Company and Coleman (Parent) Holding, Inc.(10)
10.a Employment Agreement dated as of February 20, 1998, by and between
Sunbeam and Albert J. Dunlap(4)
10.b Employment Agreement dated as of February 20, 1998, by and between
Sunbeam and Russell A. Kersh(4)
10.c Employment Agreement dated as of February 20, 1998, by and between
Sunbeam and David C. Fannin(4)
10.d Employment Agreement dated as of January 1, 1997, by and between
Sunbeam and Donald Uzzi(3)
10.e Sunbeam Executive Benefit Replacement Plan(4)
10.f Amended and Restated Sunbeam Corporation Stock Option Plan(10)
10.g Performance Based Compensation Plan(4)
10.h Tax Sharing Agreement dated as of October 31, 1990, by and among
Sunbeam, SAIL, SOHO, Montey and the subsidiaries of Sunbeam listed
therein(1)
10.i Receivables Sale and Contribution Agreement dated as of December 4,
1997, between Sunbeam Products, Inc. and Sunbeam Asset
Diversification, Inc.(4)
10.j Receivables Purchase and Servicing Agreement dated as of December 4,
1997, between Sunbeam Products, Inc., Llama Retail, L.P., Capital
USA, LLC and Sunbeam Asset Diversification, Inc.(4)
10.k Agreement and Plan of Merger among Sunbeam Corporation, Laser
Acquisition Corp., CLN Holdings, Inc., and Coleman (Parent)
Holdings, Inc. dated as of February 27, 1998(4)
10.l Agreement and Plan of Merger among Sunbeam Corporation, Camper
Acquisition Corp., and The Coleman Company, Inc. dated as of
February 27, 1998(4)
10.m Agreement and Plan of Merger between Sunbeam Corporation, Java
Acquisition Corp., and Signature Brands USA, Inc. dated as of
February 28, 1998(4)
10.n Stock Purchase Agreement among Java Acquisition Corp. and the
Sellers named therein dated as of February 28, 1998(4)
10.o Agreement and Plan of Merger by and among Sunbeam Corporation,
Sentinel Acquisition Corp., and First Alert, Inc. dated as of
February 28, 1998(4)
10.p Stock Sale Agreement among Sunbeam Corporation and the Shareholders
named therein dated as of February 28, 1998(4)
10.q Credit Agreement dated as of March 30, 1998, among Sunbeam
Corporation, the Borrowers referred to therein, the Lenders party
thereto, Morgan Stanley Senior Funding, Inc., Bank of America
National Trust and Savings Association and First Union National
Bank(5)
10.r First Amendment to Credit Agreement dated as of May 8, 1998, among
Sunbeam Corporation, the Subsidiary Borrowers referred to therein,
the Lenders party thereto, Morgan Stanley Senior Funding, Inc., Bank
America National Trust and Savings Association and First Union
National Bank(5)
10.s Second Amendment to Credit Agreement dated as of June 30, 1998,
among the Company, the Subsidiary Borrowers referred to therein, the
Lenders party thereto, Morgan Stanley Senior Funding, Inc., Bank
America National Trust and Savings Association and First Union
National Bank(8)
10.t Third Amendment to Credit Agreement dated as of October 19, 1998,
among the Company, the Subsidiary Borrowers referred to therein, the
Lenders party thereto, Morgan Stanley Senior Funding, Inc., Bank
America National Trust and Savings Association and First Union
National Bank(8)
10.u Fourth Amendment to Credit Agreement dated as of April 10, 1999,
among the Company, the Subsidiary Borrowers referred to therein, the
Lenders party thereto, Morgan Stanley Senior Funding, Inc., Bank
America National Trust and Savings Association and First Union
National Bank(10)
10.v Fifth Amendment to Credit Agreement, Third Waiver and Agreement
dated April 15, 1999; among the Company, the Subsidiary Borrowers
referred to therein, the Lenders party thereto, Morgan Stanley
Senior Funding, Inc., Bank America National Trust and Savings
Association and First Union National Bank(9)
10.w Employment Agreement between the Company and Jerry W. Levin dated
June 15, 1998(8)
10.x Employment Agreement between the Company and Paul Shapiro dated June
15, 1998(8)
10.y Employment Agreement between the Company and Bobby Jenkins dated
June 15, 1998(8)
10.z Agreement between the Company and David Fannin dated August 20,
1998(8)
10.aa First Amendment to Receivables Sale and Contribution Agreement dated
April 2, 1998, between Sunbeam Products, Inc. and Sunbeam Asset
Diversification, Inc.(8)

10.bb First Amendment to Receivables Purchase and Servicing Agreement
dated April 2, 1998, between Llama Retail Funding, L.P., Capital
USA, LLC, Sunbeam Products, Inc. and Sunbeam Asset
Diversification, Inc.(8)
10.cc Second Amendment to Receivables Purchase and Servicing Agreement
dated July 29,1998, between Llama Retail Funding, L.P., Capital USA,
LLC, Sunbeam Products, Inc. and Sunbeam Asset Diversification,
Inc.(8)
10.dd Sunbeam Corporation Management Incentive Compensation Plan(10)
10.ee Sunbeam Corporation Stock Option Repricing Plan(10)
10.ff Amendment No.1 to Agreement and Plan of Merger, dated as of March
29, 1998, among the Company, Laser Acquisition Corp.,
Coleman(Parent) Holdings, Inc., and CLN Holdings, Inc.(9)
10.gg Compensation and Indemnification Agreement entered into as of June
29, 1998, between the Company and each of Howard G. Kristol, Charles
M. Elson, Peter A. Langerman and Faith Whittlesey.(10)
10.hh Agreement between Sunbeam Asset Diversification, Inc. and Capital
USA, LLC amending the Receivables Purchase Agreement among Llama
Retail Funding, L.P., Sunbeam Asset Diversification, Inc., Capital
USA, LLC and Sunbeam Products, Inc.(10)
10.ii Sixth Amendment to Credit Agreement dated as of May 25, 1999,
among the Company, the Subsidiary Borrowers referred to therein, the
Lenders party thereto, Morgan Stanley Senior Funding, Inc., Bank
America National Trust and Savings Association and First Union
National Bank (12)
10.jj Seventh Amendment to Credit Agreement dated as of October 25, 1999,
among the Company, the Subsidiary Borrowers referred to therein, the
Lenders party thereto, Morgan Stanley Senior Funding, Inc., Bank
America National Trust and Savings Association and First Union
National Bank(11)
10.kk Eighth Amendment to Credit Agreement dated as of November 16, 1999,
among the Company, the Subsidiary Borrowers referred to therein, the
Lenders party thereto, Morgan Stanley Senior Funding, Inc., Bank
America National Trust and Savings Association and First Union
National Bank(11)
10.ll Ninth Amendment to Credit Agreement dated as of November 30, 1999,
among the Company, the Subsidiary Borrowers referred to therein, the
Lenders party thereto, Morgan Stanley Senior Funding, Inc., Bank
America National Trust and Savings Association and First Union
National Bank*
21. Subsidiaries of the Registrant*
23.1 Independent Auditors' Consent--Deloitte & Touche LLP*
23.2 Consent of Independent Certified Public Accountants--Arthur Andersen
LLP*
27. Financial Data Schedule, submitted electronically to the Securities
and Exchange Commission for information only and not filed*

(1) Incorporated by reference to the Company's Annual Report on Form 10-K
for the fiscal year ended September 30, 1990.

(2) Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1996.

(3) Incorporated by reference to the Company's Annual Report on Form 10-K
for the fiscal year ended December 29, 1996.

(4) Incorporated by reference to the Company's Annual Report on Form 10-K
for the fiscal year ended December 28, 1997.

(5) Incorporated by reference to the Company's Report on Form 10-Q/A for
the quarter ended March 30, 1998.

(6) Incorporated by reference to the Company's Report on Form 8-K filed
April 13, 1998.

(7) Incorporated by reference to the Company's Report on Form 8-K filed
August 14, 1998.

(8) Incorporated by reference to the Company's Report on Form 10-K/A for
the fiscal year ending December 28, 1997 filed November 12, 1998.

(9) Incorporated by reference to the Annual Report on Form 10-K filed by
THE COLEMAN COMPANY, INC. ON APRIL 15, 1999.

(10) Incorporated by reference to the Annual Report on Form 10-K/A for the
fiscal year ended December 31, 1998.

(11) Incorporated by reference to the Company's Report on Form 8-K filed
November 19, 1999.

(12) Incorporated by reference to Sunbeam's Registration Statement on Form
S-1 (No. 333-71819), filed with the Securities and Exchange Commission
on February 4, 1999.

* Filed with this Report.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

SUNBEAM CORPORATION

By: /s/ BOBBY G. JENKINS
-------------------------------
Bobby G. Jenkins
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Dated: May 1, 2000

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated.

NAME AND SIGNATURE TITLE DATE

/s/ JERRY W. LEVIN Chairman of the Board, President
- ------------------------------ and Chief Executive Officer May 1, 2000
Jerry W. Levin (Principal Executive Officer)

/s/ CHARLES M. ELSON Director
- ------------------------------ May 1, 2000
Charles M. Elson

/s/ HOWARD GITTIS Director
- ------------------------------ May 1, 2000
Howard Gittis

/s/ JOHN H. KLEIN Director
- ------------------------------ May 1, 2000
John H. Klein

/s/ HOWARD G. KRISTOL Director
- ------------------------------ May 1, 2000
Howard G. Kristol

/s/ PETER A. LANGERMAN Director
- ------------------------------ May 1, 2000
Peter A. Langerman

/s/ FAITH WHITTLESEY Director
- ------------------------------ May 1, 2000
Faith Whittlesey

/s/ PHILIP BEEKMAN Director
- ------------------------------ May 1, 2000
Philip Beekman

/s/ JOHN W. FREDERICK Vice President, Finance and Corporate Controller
- ------------------------------ (Principal Accounting Officer) May 1, 2000
John W. Frederick

SUNBEAM CORPORATION AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

PAGE
FINANCIAL STATEMENTS:

Independent Auditor's Report........................................................................................ F-2

Report of Independent Auditors...................................................................................... F-3

Report of Independent Certified Public Accountants.................................................................. F-4

Consolidated Statements of Operations for the Fiscal Years Ended December 31, 1999, December 31, 1998 and
December 28, 1997................................................................................................ F-5

Consolidated Balance Sheets as of December 31, 1999 and December 31, 1998........................................... F-6

Consolidated Statements of Shareholders' Equity (Deficiency) for the Fiscal Years Ended December 31, 1999,
December 31, 1998 and December 28, 1997.......................................................................... F-7

Consolidated Statements of Cash Flows for the Fiscal Years Ended December 31, 1999, December 31, 1998 and
December 28, 1997................................................................................................ F-8

Notes to Consolidated Financial Statements.......................................................................... F-9

FINANCIAL STATEMENT SCHEDULES:*

II. Valuation and Qualifying Accounts............................................................................... F-43

* All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are
not required under the related instructions or are inapplicable, and
therefore not included herein.

F-1

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of Sunbeam Corporation and
subsidiaries:

We have audited the accompanying consolidated balance sheets of Sunbeam
Corporation and subsidiaries (the "Company") as of December 31, 1999 and 1998,
and the related consolidated statements of operations, shareholders' equity
(deficiency), and cash flows for each of the two years in the period ended
December 31, 1999. Our audits also included the financial statement schedules as
of and for the years ended December 31, 1999 and 1998, listed in the Index to
Financial Statements. These financial statements and financial statement
schedules are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and financial statement
schedules based on our audits. We did not audit the consolidated financial
statements of The Coleman Company, Inc. and subsidiaries (consolidated
subsidiaries), which statements reflect total assets constituting 30% and 27%,
respectively, of consolidated total assets as of December 31, 1999 and 1998, and
total revenues constituting 51% and 40%, respectively, of consolidated total
revenues for the years then ended. Those consolidated financial statements were
audited by other auditors whose report has been furnished to us, and our
opinion, insofar as it relates to the amounts included for The Coleman Company,
Inc. and subsidiaries, is based solely on the report of such other auditors.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and the report of
the other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of the other auditors, such
consolidated financial statements present fairly, in all material respects, the
financial position of Sunbeam Corporation and subsidiaries as of December 31,
1999 and 1998, and the results of their operations and their cash flows for each
of the two years in the period ended December 31, 1999 in conformity with
accounting principles generally accepted in the United States of America. Also,
in our opinion, based on our audits and (as to the amounts included for The
Coleman Company, Inc. and subsidiaries) the report of other auditors, such
financial statement schedules as of and for the year ended December 31, 1999 and
1998, when considered in relation to the basic consolidated financial statements
taken as a whole, present fairly in all material respects the information set
forth therein.

/s/ DELOITTE & TOUCHE LLP
Certified Public Accountants

Fort Lauderdale, Florida
April 28, 2000

F-2

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholder
The Coleman Company, Inc.

We have audited the consolidated balance sheets of The Coleman Company,
Inc. and subsidiaries as of December 31, 1999 and 1998 and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years then ended (not presented separately herein). These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
The Coleman Company, Inc. and subsidiaries at December 31, 1999 and 1998, and
the consolidated results of their operations and their cash flows for the years
then ended, in conformity with accounting principles generally accepted in the
United States.

/s/ Ernst & Young LLP

Kansas City, Missouri
April 28, 2000

F-3

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders of Sunbeam Corporation:

We have audited the accompanying consolidated statements of operations,
shareholders' equity (deficiency) and cash flows of Sunbeam Corporation (a
Delaware corporation) and subsidiaries for the fiscal year ended December 28,
1997. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Sunbeam
Corporation and subsidiaries for the fiscal year ended December 28, 1997 in
conformity with generally accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. Schedule II for the year ended December 28, 1997 is
presented for the purpose of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
Schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Fort Lauderdale, Florida,
October 16, 1998

F-4

SUNBEAM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)

FISCAL YEAR ENDED
-----------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 28,
1999 1998 1997
----------- ----------- -----------

Net sales ................................................................ $ 2,397,979 $ 1,836,871 $ 1,073,090
Cost of goods sold ....................................................... 1,793,360 1,781,851 830,956
Selling, general and administrative expense .............................. 701,223 725,045 152,653
Restructuring benefit .................................................... -- -- (14,582)
----------- ----------- -----------
Operating (loss) earnings ................................................ (96,604) (670,025) 104,063
Interest expense ......................................................... 200,181 130,607 11,381
Other (income) expense, net .............................................. (3,599) (4,284) 12
----------- ----------- -----------
(Loss) earnings from continuing operations before income taxes,
minority interest and extraordinary charge ............................ (293,186) (796,348) 92,670
Income taxes (benefit):
Current ............................................................... (4,227) 8,667 1,528
Deferred .............................................................. (4,597) (18,797) 38,824
----------- ----------- -----------
(8,824) (10,130) 40,352
----------- ----------- -----------
Minority interest ........................................................ 15,157 (10,681) --
----------- ----------- -----------
(Loss) earnings from continuing operations before extraordinary
charge ................................................................ (299,519) (775,537) 52,318
Loss on sale of discontinued operations, net of income taxes ............. -- -- (14,017)
Extraordinary charge from early extinguishments of debt .................. -- (122,386) --
----------- ----------- -----------
Net (loss) earnings ...................................................... $ (299,519) $ (897,923) $ 38,301
=========== =========== ===========
(Loss) earnings per share:
(Loss) earnings from continuing operations before extraordinary charge:
Basic .............................................................. $ (2.97) $ (7.99) $ 0.62
=========== =========== ===========
Diluted ............................................................ $ (2.97) $ (7.99) $ 0.60
=========== =========== ===========
Loss on sale of discontinued operations:
Basic .............................................................. $ -- $ -- $ (0.17)
=========== =========== ===========
Diluted ............................................................ $ -- $ -- $ (0.16)
=========== =========== ===========
Extraordinary charge:
Basic .............................................................. $ -- $ (1.26) $ --
=========== =========== ===========
Diluted ............................................................ $ -- $ (1.26) $ --
=========== =========== ===========
Net (loss) earnings:
Basic .............................................................. $ (2.97) $ (9.25) $ 0.45
=========== =========== ===========
Diluted ............................................................ $ (2.97) $ (9.25) $ 0.44
=========== =========== ===========
Weighted average common shares outstanding:
Basic .............................................................. 100,744 97,121 84,945
Diluted ............................................................ 100,744 97,121 87,542

See Notes to Consolidated Financial Statements.

F-5

SUNBEAM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)

DECEMBER 31, DECEMBER 31,
1999 1998
----------- -----------

ASSETS
Current assets:
Cash and cash equivalents ..................................... $ 40,799 $ 61,432
Restricted investments ........................................ -- 74,386
Receivables, net .............................................. 364,338 361,774
Inventories ................................................... 460,680 519,189
Prepaid expenses and other current assets ..................... 72,130 74,187
----------- -----------
Total current assets ....................................... 937,947 1,090,968
Property, plant and equipment, net ............................... 447,116 455,172
Trademarks, tradenames, goodwill and other, net .................. 1,747,286 1,859,377
----------- -----------
$ 3,132,349 $ 3,405,517
=========== ===========
LIABILITIES AND SHAREHOLDERS' (DEFICIENCY) EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt ......... $ 139,806 $ 119,103
Accounts payable .............................................. 185,610 162,173
Other current liabilities ..................................... 300,809 321,185
----------- -----------
Total current liabilities .................................. 626,225 602,461
Long-term debt, less current portion ............................. 2,164,002 2,142,362
Other long-term liabilities ...................................... 241,264 248,459
Deferred income taxes ............................................ 93,288 100,473
Minority interest ................................................ 66,910 51,325
Commitments and contingencies (Notes 3 and 15)
Shareholders' (deficiency) equity:
Preferred stock (2,000,000 shares authorized, none outstanding) -- --
Common stock (100,746,400 and 100,739,053 shares issued) ...... 1,007 1,007
Additional paid-in capital .................................... 1,122,455 1,123,457
Accumulated deficit ........................................... (1,109,516) (809,997)
Accumulated other comprehensive loss .......................... (73,286) (54,030)
----------- -----------
Total shareholders' (deficiency) equity .................... (59,340) 260,437
----------- -----------
$ 3,132,349 $ 3,405,517
=========== ===========

See Notes to Consolidated Financial Statements.

F-6

SUNBEAM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIENCY)
(Amounts in thousands, except per share amounts)

(ACCUMULATED ACCUMULATED TOTAL
ADDITIONAL DEFICIT) OTHER SHAREHOLDERS'
COMMON PAID-IN RETAINED COMPREHENSIVE UNEARNED TREASURY EQUITY
STOCK CAPITAL EARNINGS (LOSS) INCOME COMPENSATION STOCK (DEFICIENCY)
----------- ----------- ----------- ----------- ----------- ----------- -----------

Balance at December 29, 1996 ........ $ 884 $ 447,948 $ 54,899 $ (18,274) $ (7,036) $ (63,388) $ 415,033
Comprehensive income:
Net earnings ..................... -- -- 38,301 -- -- -- 38,301
Minimum pension liability ........ -- -- -- (14,050) -- -- (14,050)
Translation adjustments .......... -- -- -- (739) -- -- (739)
-----------
Comprehensive income ........... 23,512
Common dividends ($0.04 per share) .. -- -- (3,399) -- -- -- (3,399)
Exercise of stock options ........... 16 30,496 -- -- -- -- 30,512
Amortization of unearned compensation -- -- -- -- 5,322 -- 5,322
Other stock issuances ............... -- 756 -- -- -- 343 1,099
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance at December 28, 1997 ........ 900 479,200 89,801 (33,063) (1,714) (63,045) 472,079
Comprehensive loss:
Net loss ......................... -- -- (897,923) -- -- -- (897,923)
Minimum pension liability ........ -- -- -- (21,795) -- -- (21,795)
Translation adjustments .......... -- -- -- 828 -- -- 828
-----------
Comprehensive loss ............. (918,890)
Common dividends ($0.02 per share) .. -- -- (1,875) -- -- -- (1,875)
Exercise of stock options ........... 9 18,383 -- -- -- -- 18,392
Grant of restricted stock ........... 4 18,880 -- -- (32,500) -- (13,616)
Cancellation of restricted stock .... (1) (5,228) -- -- 10,182 (2,250) 2,703
Amortization of unearned compensation -- -- -- -- 24,032 -- 24,032
Acquisition of Coleman .............. 95 541,428 -- -- -- 65,200 606,723
Warrants issued ..................... -- 70,000 -- -- -- -- 70,000
Other stock issuances ............... -- 794 -- -- -- 95 889
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance at December 31, 1998 ........ 1,007 1,123,457 (809,997) (54,030) -- -- 260,437

Comprehensive loss:
Net loss ......................... -- -- (299,519) -- -- -- (299,519)
Minimum pension liability ........ -- -- -- (5,995) -- -- (5,995)
Translation adjustments .......... -- -- -- (13,261) -- -- (13,261)
-----------
Comprehensive loss ............. (318,775)

Other ............................... -- (1,002) -- -- -- -- (1,002)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance at December 31, 1999 ........ $ 1,007 $ 1,122,455 $(1,109,516) $ (73,286) $ -- $ -- $ (59,340)
=========== =========== =========== =========== =========== =========== ===========

See Notes to Consolidated Financial Statements.

F-7

SUNBEAM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)

FISCAL YEAR ENDED
-----------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 28,
1999 1998 1997
----------- ----------- -----------

Operating Activities:
Net (loss) earnings .......................................... $ (299,519) $ (897,923) $ 38,301
Adjustments to reconcile net (loss) earnings to net
cash used in operating activities:
Depreciation and amortization ........................... 132,006 107,865 39,757
Non-cash interest charges ............................... 45,565 32,531 --
Restructuring benefit ................................... -- -- (14,582)
Loss on sale of discontinued operations, net of taxes ... -- -- 14,017
Deferred income taxes ................................... (4,597) (18,797) 38,824
Minority interest ....................................... 15,157 (10,681) --
(Gain) loss on sale of property, plant and equipment .... (3,673) 3,260 --
Provision for fixed assets .............................. 8,008 39,404 --
Provision for excess and obsolete inventory ............. 3,828 95,830 --
Asset impairment ........................................ 52,000 62,490 --
Issuance of warrants .................................... -- 70,000 --
Non-cash compensation charge ............................ -- 13,118 --
Extraordinary charge from early extinguishments of debt . -- 122,386 --

Changes in operating assets and liabilities, exclusive
of impact of divestitures and acquisitions:
Receivables, net ........................................ (4,952) 147,045 1,044
Inventories ............................................. 49,078 37,112 (140,555)
Accounts payable ........................................ 29,160 (68,187) 4,261
Restructuring accrual ................................... (645) (3,894) (31,957)
Prepaid expenses and other current assets and liabilities (6,868) 50,622 (16,092)
Income taxes payable .................................... (13,919) 15,758 52,052
Change in other long-term and non-operating liabilities . 692 13,994 (1,401)
Other, net .............................................. (5,605) (2,347) 10,288
----------- ----------- -----------
Net cash used in operating activities ................. (4,284) (190,414) (6,043)
----------- ----------- -----------
Investing Activities:
Capital expenditures ......................................... (90,194) (53,686) (60,544)
Proceeds from sale of divested operations and other assets ... 10,451 9,575 90,982
Purchases of businesses, net of cash acquired ................ (4,778) (522,412) --
Other, net ................................................... 22 (139) --
----------- ----------- -----------
Net cash (used in) provided by investing activities ... (84,499) (566,662) 30,438
----------- ----------- -----------
Financing Activities:
Issuance of convertible senior subordinated debentures,
net of financing fees .................................. -- 729,622 --
Net borrowings under revolving credit facility ............... 75,971 1,205,675 5,000
Payments of debt obligations, including prepayment penalties . (3,225) (1,186,796) (12,157)
Proceeds from exercise of stock options ...................... 35 19,553 26,613
Payments of dividends on common stock ........................ -- (1,875) (3,399)
Other, net ................................................... (4,631) 31 320
----------- ----------- -----------
Net cash provided by financing activities ............. 68,150 766,210 16,377
----------- ----------- -----------
Net (decrease) increase in cash and cash equivalents .. (20,633) 9,134 40,772
Cash and cash equivalents at beginning of year ............... 61,432 52,298 11,526
----------- ----------- -----------
Cash and cash equivalents at end of year ..................... $ 40,799 $ 61,432 $ 52,298
=========== =========== ===========

See Notes to Consolidated Financial Statements.

F-8

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Sunbeam Corporation and all of its majority-owned subsidiaries ("Sunbeam" or the
"Company") is a leading designer, manufacturer and marketer of branded consumer
products. The Company's primary business is the manufacturing, marketing and
distribution of durable household and outdoor leisure consumer products through
mass market and other distribution channels in the United States and
internationally. The Company also sells its products to professional and
commercial end users such as small businesses, health care providers, hotels and
other institutions. The Company's principal products include household kitchen
appliances; health monitoring and care products for home use; scales for
consumer and professional use for weight management and business uses; electric
blankets and throws; clippers and trimmers for consumer, professional and animal
uses; smoke and carbon monoxide detectors; outdoor barbecue grills; camping
equipment such as tents, lanterns, sleeping bags and stoves; coolers; backpacks
and book bags; and portable generators and compressors. The Company, through its
Thalia Products Inc. ("Thalia") subsidiary, is developing Home Linking
Technology(TM), or HLT(TM), which is designed to allow products to communicate
with each other.

In 1998 the Company acquired an indirect controlling interest in The Coleman
Company, Inc. ("Coleman") and all the outstanding common stock of Signature
Brands USA, Inc. ("Signature Brands") and First Alert, Inc. ("First Alert"). In
January 2000, the Company acquired the remaining interest in Coleman.

See Note 3 for information relevant to management's plans to fund its capital
and debt service requirements for 2000.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Sunbeam
Corporation and all majority-owned subsidiaries that it controls. All material
intercompany balances and transactions have been eliminated.

PRESENTATION OF FISCAL PERIODS

To standardize the fiscal period ends of the Company and its acquired entities,
effective with its 1998 fiscal year, the Company changed its fiscal year end
from the Sunday nearest December 31 to a calendar year. The impact of this
change in fiscal period on net sales for 1998 was to increase sales by
approximately $5.5 million, and the impact on operating results for the period
was to increase the net loss by approximately $1.5 million.

Fiscal year 1997 ended on December 28, 1997 which encompassed a 52-week period.

USE OF ESTIMATES

The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates. Significant accounting estimates include the establishment of the
allowance for doubtful accounts, tax valuation allowances, reserves for sales
returns and allowances, product warranty, product liability, excess and obsolete
inventory, litigation and environmental exposures.

CASH AND CASH EQUIVALENTS

The Company considers highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.

CONCENTRATIONS OF CREDIT RISK

Substantially all of the Company's trade receivables are due from retailers and
distributors located throughout the United States, Europe, Latin America,
Canada, and Japan. Approximately 35% of the Company's sales in 1999 were to its
5 largest customers. The Company establishes its credit policies based on an
ongoing evaluation of its customers' creditworthiness and competitive market
conditions and establishes its allowance for doubtful accounts based on an
assessment of exposures to credit losses at each balance sheet date. The Company
believes its allowance for doubtful accounts is sufficient based on the credit
exposures outstanding at December 31, 1999. However, certain retailers filed for
bankruptcy protection in the last several years and it is possible that
additional credit losses could be incurred if other retailers seek bankruptcy
protection or if the trends of retail consolidation continue.

F-9

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

INVENTORIES

Inventories are stated at the lower-of-cost-or-market with cost being determined
principally by the first-in, first-out method.

In certain instances, the Company receives rebates from vendors based on the
volume of merchandise purchased. Vendor rebates are recorded as reductions in
the price of the purchased merchandise and are recognized in operations as the
related inventories are sold.

Effective in fiscal 1997, as a consequence of the initial outsourcing of the
supplies inventories management function, the Company began capitalizing the
cost of manufacturing supplies, whereas previously the cost of these supplies
was charged to operations when purchased. This change, which management believes
is preferable in that it provides for a more appropriate matching of revenues
and expenses, increased pre-tax operating earnings in fiscal 1997 by $2.8
million. Additional disclosures pursuant to Accounting Principles Board ("APB")
Opinion No. 20, Accounting Changes, are not provided since supplies inventories
were not monitored for financial reporting purposes prior to the initial
outsourcing of the inventory management function and, consequently, the
information is not available.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost. The Company provides for
depreciation using primarily the straight-line method in amounts that allocate
the cost of property, plant and equipment over the following useful lives:

Buildings and improvements........................ 5 to 45 years
Machinery, equipment and tooling.................. 3 to 15 years
Furniture and fixtures............................ 3 to 10 years

Leasehold improvements are amortized on a straight-line basis over the shorter
of its estimated useful life or the term of the lease.

LONG-LIVED ASSETS

The Company accounts for long-lived assets pursuant to Statement of Financial
Accounting Standards ("SFAS") No. 121, ACCOUNTING FOR THE IMPAIRMENT OF
LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF. The Company
periodically evaluates factors, events and circumstances which include, but are
not limited to, the historical and projected operating performance of the
business operations, specific industry trends and general economic conditions to
assess whether the remaining estimated useful lives of long-lived assets may
warrant revision or whether the remaining asset values are recoverable through
future operations. When such factors, events or circumstances indicate that
long-lived assets should be evaluated for possible impairment, the Company uses
an estimate of cash flows (undiscounted and without interest charges) over the
remaining lives of the assets to measure recoverability. If the estimated cash
flows are less than the carrying value of the asset, the loss is measured as the
amount by which the carrying value of the asset exceeds fair value. As of
December 31, 1999 and 1998, and as of December 28, 1997 based upon the Company's
analysis pursuant to SFAS No. 121, there were no long-lived assets with
preliminary indication of impairment, except as discussed in Note 11.

With respect to enterprise level goodwill, the Company reviews impairment when
changes in circumstances, similar to those described above for long-lived
assets, indicate that the carrying value may not be recoverable. Under these
circumstances, the Company estimates future cash flows using the recoverability
method (undiscounted and including related interest charges), as a basis for
recording any impairment loss. An impairment loss is then recorded to adjust the
carrying value of goodwill to the recoverable amount. The impairment loss taken
is no greater than the amount by which the carrying value of the net assets of
the business exceeds its fair value. As a result of the Company's analysis of
the recoverability of goodwill as of December 31, 1999 and 1998 and as of
December 28, 1997, there were no indications of impairment, except as discussed
in Note 11.

DERIVATIVE FINANCIAL INSTRUMENTS

The Company enters into interest rate swap agreements and foreign exchange rate
contracts as part of the management of its interest rate and foreign currency
exchange rate exposures. The Company has no derivative financial instruments
held for trading purposes and none of the instruments are leveraged. All
financial instruments are put into place to hedge specific exposures. To qualify
as a hedge, the item to be hedged must expose the Company to price, interest
rate or foreign currency exchange rate risk and the hedging instrument must
reduce that exposure. Any contracts held or issued that do not meet the
requirements of a hedge are recorded at fair value in the Consolidated Balance
Sheets and any changes in that fair value are recognized in the Consolidated
Statements of Operations.

F-10

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

Interest rate swap agreements - Interest rate differentials to be paid or
received as a result of interest rate swap agreements are accrued and recognized
as an adjustment of interest expense related to the designated debt. Amounts
receivable or payable under the agreements are included in receivables or other
current liabilities in the Consolidated Balance Sheets. The fair value of the
swap agreements and changes in the fair value as a result of changes in market
interest rates are not recognized in the financial statements. Related premiums
are amortized to interest expense ratably during the life of the swap agreement.

Gains and losses on termination of interest rate swap agreements are deferred
and amortized as an adjustment to interest expense over the original period of
interest exposure, provided the designated liability continues to exist.
Realized and unrealized changes in the fair value of interest rate swaps
designated with liabilities that no longer exist are recorded as a component of
the gain or loss arising from the disposition of the designated liability.

Interest rate cap agreements - Amounts receivable relating to interest rate cap
agreements are accrued and recognized as an adjustment to interest expense
associated with the designated debt. Amounts receivable under the agreements are
included in receivables in the Consolidated Balance Sheets. The fair value of
the cap agreements and changes to the fair value as a result of changes in the
market interest rates are not recognized in the financial statements.

Foreign currency options and forward contracts - Foreign currency contracts
designated and effective as hedges are marked to market with realized and
unrealized gains and losses deferred and recognized in operations when the
designated transaction occurs. Foreign currency contracts not designated as
hedges, failing to be hedges or failing to continue as effective hedges are
included in operations as foreign exchange gains or losses.

Discounts or premiums on forward contracts designated and effective as hedges
are amortized or accreted to expense using the straight-line method over the
term of the related contract. Discounts or premiums on forward contracts not
designated or effective as hedges are included in the mark to market adjustment
and recognized in income as foreign exchange gains or losses. Initial premiums
paid for purchased option contracts are amortized over the related option
period.

CAPITALIZED INTEREST

Interest costs for the construction of certain long-term assets are capitalized
and amortized over the related assets' estimated useful lives. Total interest
costs during 1999, 1998 and 1997 amounted to $201.5 million, $131.4 million, and
$12.3 million, respectively, of which $1.3 million, $0.8 million, and $0.9
million, respectively, was capitalized as a cost of the related long-term
assets.

DEFERRED FINANCING COSTS

Costs incurred in connection with obtaining financing are deferred and amortized
as a charge to interest expense over the terms of the related borrowings using
the effective interest method.

INTANGIBLES

Trademarks, tradenames and goodwill are being amortized on a straight-line basis
over 20 to 40 years.

REVENUE RECOGNITION

The Company recognizes sales and related cost of goods sold from product sales
at the latter of the time of shipment or when title passes to the customers. In
some situations, the Company has shipped product with the right of return where
the Company is unable to reasonably estimate the level of returns and/or the
sale is contingent upon the resale of the product. In these situations, the
Company does not recognize revenue upon product shipment, but rather when the
buyer of the product informs the Company that the product has been sold. Net
sales is comprised of gross sales less provisions for estimated customer
returns, discounts, promotional allowances, cooperative advertising allowances
and costs incurred by the Company to ship product to customers. Reserves for
estimated returns are established by the Company concurrently with the
recognition of revenue. Reserves are established based on a variety of factors,
including historical return rates, estimates of customer inventory levels, the
market for the product and projected economic conditions. The Company monitors
these reserves and makes adjustments to them when management believes that
actual returns or costs to be incurred differ from amounts recorded.

F-11

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

WARRANTY COSTS

The Company provides for warranty costs in amounts it estimates will be needed
to cover future warranty obligations for products sold during the year.
Estimates of warranty costs are periodically reviewed and adjusted, when
necessary, to consider actual experience.

PRODUCT LIABILITY

The Company provides for product liability costs it estimates will be needed to
cover future product liability obligations for product sold during the year.
Estimates of product liability costs are periodically reviewed and based upon
actuarial valuations made by an independent actuarial consultant. The estimates
are updated to consider actual experience, number of claims and other relevant
factors.

LEGAL COSTS

The Company records charges for the costs it anticipates incurring in connection
with litigation and claims against the Company when management can reasonably
estimate these costs.

INCOME TAXES

The Company accounts for income taxes under the liability method in accordance
with SFAS No. 109, Accounting for Income Taxes. The provision for income taxes
includes deferred income taxes resulting from items reported in different
periods for income tax and financial statement purposes. Deferred tax assets and
liabilities represent the expected future tax consequences of the differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. The effects of changes in tax rates
on deferred tax assets and liabilities are recognized in the period that
includes the enactment date.

ADVERTISING COSTS

Media advertising costs included in Selling, General and Administrative Expense
("SG&A") are expensed as incurred. Allowances provided to customers for
cooperative advertising are charged to operations, as earned, based on revenues
and are included as a deduction from gross sales in determining net sales. The
amounts charged to operations for media and cooperative advertising during 1999,
1998 and 1997 were $109.8 million, $124.5 million and $55.7 million,
respectively.

RESEARCH AND DEVELOPMENT

Research and development expenditures are expensed in the period incurred. The
amounts charged against operations during 1999, 1998 and 1997 were $26.8
million, $18.7 million, and $5.7 million, respectively.

FOREIGN CURRENCY TRANSLATION

The assets and liabilities of subsidiaries, other than those operating in highly
inflationary economies, are translated into U.S. dollars at the rates of
exchange in effect at the balance sheet date. The resulting translation gains
and losses are accumulated in a separate component of shareholders' equity
(deficiency). Income and expense items are converted into U.S. dollars at
average rates of exchange prevailing during the year with gains or losses
resulting from foreign currency transactions included in the results of
operations.

For subsidiaries operating in highly inflationary economies (Venezuela),
inventories and property, plant and equipment are translated at the rate of
exchange on the date the assets were acquired, while other assets and
liabilities are translated at year-end exchange rates. Translation adjustments
for those operations are included in Other (Income) Expense, Net in the
accompanying Consolidated Statements of Operations. Effective January 1, 1999,
Mexico is no longer considered highly inflationary.

STOCK-BASED COMPENSATION PLANS

SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION allows either adoption of
a fair value method for accounting for stock-based compensation plans or
continuation of accounting under APB Opinion No. 25, ACCOUNTING FOR STOCK ISSUED
TO EMPLOYEES, and related interpretations with supplemental disclosures.

F-12

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

The Company has chosen to account for its stock options using the intrinsic
value based method prescribed in APB Opinion No. 25 and, accordingly, does not
recognize compensation expense for stock option grants made at an exercise price
equal to or in excess of the fair market value of the stock at the date of
grant. Pro forma net income and earnings per share amounts as required by SFAS
123 are presented in Note 9 as if the fair value method had been adopted;
however, SFAS No. 123 does not impact the Company's results of operations,
financial position or cash flows.

BASIC AND DILUTED (LOSS) EARNINGS PER SHARE OF COMMON STOCK

Basic (loss) earnings per common share calculations are determined by dividing
(loss) earnings available to common shareholders by the weighted average number
of shares of common stock outstanding. Diluted (loss) earnings per share are
determined by dividing (loss) earnings available to common shareholders by the
weighted average number of shares of common stock and dilutive common stock
equivalents outstanding (all related to outstanding stock options, restricted
stock, warrants and the Zero Coupon Convertible Senior Subordinated Debentures).

For the years ended December 31, 1999 and 1998, respectively, 55,661 and
1,902,177 shares related to stock options, were not included in diluted average
common shares outstanding because their effect would be antidilutive. Stock
options to purchase 19,412,722 and 7,330,574 common shares were excluded from
potential common shares at December 31, 1999 and 1998, respectively, as the
option exercise prices were greater than the average market price of the
Company's common stock during the year. Diluted average common shares
outstanding as of December 31, 1999 and 1998 excludes 13,242,050 shares related
to the conversion feature of the Zero Coupon Convertible Senior Subordinated
Debentures (see Note 3) and 23,000,000 shares issuable on the exercise of
warrants, due to antidilution. For the year ended December 28, 1997, the
dilutive effect of 2,718,649 equivalent shares related to stock options and
(120,923) equivalent shares of restricted stock were used in determining the
dilutive average shares outstanding.

NEW ACCOUNTING STANDARDS

RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform with the 1999
presentation.

2. ACQUISITIONS

On March 30, 1998, pursuant to a merger agreement dated as of February 27, 1998,
the Company, through a wholly-owned subsidiary, acquired approximately 81% of
the total number of then outstanding shares of common stock of Coleman from an
affiliate of MacAndrews & Forbes Holdings, Inc. ("M&F"), in exchange for
14,099,749 shares of the Company's common stock and approximately $160 million
in cash. In addition, the Company assumed approximately $1,016 million in debt.
The value of the common stock issued at the date of acquisition was derived by
using the average closing stock price as reported on the New York Stock Exchange
Composite Tape for the day before and day of the public announcement of the
acquisition. Immediately thereafter, as a result of the exercise of employee
stock options, the Company's indirect beneficial ownership of Coleman decreased
to approximately 79% of the total number of the outstanding shares of Coleman
common stock.

F-13

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

2. ACQUISITIONS - (CONTINUED)

On August 12, 1998, the Company announced that, following investigation and
negotiation conducted by a Special Committee of the Board consisting of four
outside directors not affiliated with M&F, the Company had entered into a
settlement agreement with an affiliate of M&F pursuant to which the Company was
released from certain threatened claims of M&F and its affiliates arising from
the Coleman acquisition and M&F agreed to provide certain management personnel
and assistance to the Company in exchange for the issuance to the M&F affiliate
of a warrant expiring August 24, 2003 to purchase up to 23 million shares of the
Company's common stock at a cash exercise price of $7.00 per share, subject to
antidilution adjustments. The Company concluded that the agreement to issue this
warrant did not result in a new measurement date for the purposes of determining
the purchase price for Coleman and has accounted for the issuance of this
warrant as a cost of settling a potential claim. Accordingly, a $70.0 million
non-cash SG&A expense was recorded in the third quarter of 1998, based on a
valuation performed as of August 1998 using facts existing at that time. The
valuation was conducted by an independent consultant engaged by the Special
Committee of the board of directors.

All of these acquisitions were accounted for by the purchase method of
accounting. Accordingly, the results of operations of the acquired entities are
included in the accompanying Consolidated Statements of Operations from their
respective dates of acquisition.

In each acquisition, the purchase price paid has been allocated to the fair
value (determined by independent appraisals) of tangible and identified
intangible assets acquired and liabilities assumed as follows (in millions):

SIGNATURE FIRST
COLEMAN BRANDS ALERT TOTAL
------- ------- ------- -------

Value of common stock issued ................................. $ 607 $ -- $ -- $ 607
Cash paid including expenses and mandatory redemption of debt,
net of cash acquired ...................................... 160 255 133 548
Cash received from sale of Coleman Spas, Inc. ................ (17) -- -- (17)
Cash received from stock option proceeds ..................... (9) -- -- (9)
------- ------- ------- -------
Net cash paid and equity issued .............................. 741 255 133 1,129
Fair value of total liabilities assumed, including debt ...... 1,455 83 103 1,641
------- ------- ------- -------
2,196 338 236 2,770
Fair value of assets acquired ................................ 1,113 191 172 1,476
------- ------- ------- -------
Excess of purchase price over fair value of net assets
acquired .................................................. $ 1,083 $ 147 $ 64 $ 1,294
======= ======= ======= =======

F-14

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

2. ACQUISITIONS - (CONTINUED)

The excess of purchase price over the fair value of net assets acquired has been
classified as goodwill. Goodwill related to the Coleman and Signature Brands
acquisitions is being amortized on a straight-line basis over 40 years.
Approximately $1.1 billion of goodwill was recorded by the Company in connection
with the acquisition of Coleman. Goodwill has been allocated to the various
operating businesses of Coleman based on the estimated fair value of Coleman's
component businesses. During the fourth quarter of 1998, as a result of the
significant losses incurred by First Alert, as well as its future prospects, the
Company determined that the goodwill relating to the First Alert acquisition was
impaired and, based on the determination of fair value, wrote-off the net
carrying value of goodwill approximating $62.5 million. This one-time charge is
reflected in SG&A expense in the Consolidated Statements of Operations.

As of the date of the acquisition of Coleman, the then management of the Company
determined approximately 117 employees of Coleman would need to be involuntarily
terminated in order to eliminate duplicate activities and functions and fully
integrate Coleman into the Company's operations. The Company recognized a
liability of approximately $8 million representing severance and benefit costs
related to the 117 employees pursuant to the termination plan. This liability
was included in the allocation of purchase price. As of December 31, 1999, the
Company had paid severance benefits of approximately $7.5 million and 4
employees remain to be terminated. Remaining termination costs are expected to
be paid by December 31, 2000 and no additional charges are anticipated in future
periods related to this issue.

The following unaudited pro forma financial information for the Company gives
effect to the Coleman and Signature Brands acquisitions as if they had occurred
at the beginning of the periods presented. No pro forma adjustments have been
made for the First Alert acquisition as its effects are not significant. These
pro forma results have been prepared for informational purposes only and do not
purport to be indicative of the results of operations which actually would have
occurred had the acquisitions been consummated on the dates indicated, or which
may result in the future. The unaudited pro forma results follow (in millions,
except per share data):

FISCAL YEARS ENDED
-------------------------
DECEMBER 31, DECEMBER 28,
1998 1997
----------- -----------

Net sales ................................................. $ 2,098.7 $ 2,408.9
Net loss from continuing operations before extraordinary
charge ................................................. (801.1) (23.6)
Basic and diluted loss per share from continuing operations
before extraordinary charge ............................ (7.96) (0.24)

3. DEBT

Debt at the end of each fiscal year consists of the following (in thousands):

1999 1998
---------- ----------

Term loans, due in installments through 2006, average interest rate
of 8.85% for 1999 and 8.47% for 1998 ............................................ $1,260,000 $1,262,500
Revolving credit facility, average interest rate of 8.95% for 1999
and 8.55% for 1998 .............................................................. 177,000 94,000
Zero coupon convertible senior subordinated debentures, net of unamortized
discount of $1,195,460 and $1,234,845 at December 31, 1999 and 1998, respectively 818,540 779,155
Senior subordinated notes, bearing interest at 13.0%, payable
semiannually .................................................................... -- 70,000
Other lines of credit, including foreign facilities ................................ 38,596 45,803
Other long-term borrowings, due through 2012, weighted average
interest rate of 3.93% and 3.89%, at December 31, 1999 and 1998, respectively ... 9,672 10,007
---------- ----------
2,303,808 2,261,465
Less short-term debt and current portion of long-term debt ......................... 139,806 119,103
---------- ----------
Long-term debt ..................................................................... $2,164,002 $2,142,362
========== ==========

F-15

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

3. DEBT - (CONTINUED)

Concurrent with the acquisitions, the Company replaced its $250 million
syndicated unsecured five-year revolving credit facility with a revolving and
term credit facility (the "Credit Facility"). The Credit Facility provided for
aggregate borrowings of up to $1.7 billion and in addition to other customary
covenants, required the Company to maintain specified consolidated leverage,
interest coverage and fixed charge coverage ratios as of the end of each fiscal
quarter occurring after March 31, 1998 and on or prior to the latest stated
maturity date for any of the borrowings under the Credit Facility.

As a result of, among other things, its operating losses incurred during the
first half of 1998, the Company did not achieve the specified financial ratios
for June 30, 1998 and it appeared unlikely that the Company would achieve the
specified financial ratios for September 30, 1998. Consequently, the Company and
its lenders entered into an agreement dated as of June 30, 1998 that waived
through December 31, 1998 all defaults arising from the failure of the Company
to satisfy the specified financial ratios for June 30, 1998 and September 30,
1998. Pursuant to an agreement with the Company dated as of October 19, 1998,
the Company's lenders extended all of the waivers under the June 30, 1998
agreement through April 10, 1999 and also waived through such date all defaults
arising from any failure by the Company to satisfy the specified financial
ratios for December 31, 1998. In April 1999, such waivers were extended through
April 10, 2000 and on April 10, 2000 such waivers were extended through April
14, 2000.

The Credit Facility provides for aggregate borrowings of up to $1.7 billion
pursuant to: (i) a revolving credit facility in an aggregate principal amount of
up to $400 million maturing March 30, 2005 ($52.5 million of which was used to
complete the Coleman merger which occurred on January 6, 2000); (ii) up to
$800.0 million in term loans maturing on March 30, 2005 (of which $35.0 million
was used to complete the Coleman merger which occurred on January 6, 2000) and
(iii) a $500.0 million term loan maturing September 30, 2006 (of which $5.0
million has been repaid). As of December 31, 1999, $1.4 billion was outstanding
and $0.2 billion was available for borrowing under the Credit Facility. The
remaining $0.1 billion of the $1.7 billion Credit Facility was committed for
outstanding letters of credit.

Pursuant to the Credit Facility, interest accrues, at the Company's option: (i)
at the London Interbank Offered Rate ("LIBOR"), or (ii) at the base rate of the
administrative agent which is generally the higher of the prime commercial
lending rate of the administrative agent or the Federal Funds Rate plus 0.50%,
in each case plus an interest margin which was 4.00% for LIBOR borrowings and
2.50% for base rate borrowings at December 31, 1999. The applicable interest
margin was reduced to 3.00% for LIBOR borrowings and 1.75% for base rate
borrowings on January 6, 2000, concurrent with the effective date of the Coleman
merger. The applicable interest margin is subject to further downward adjustment
upon the reduction of the aggregate borrowings under the Credit Facility.
Borrowings under the Credit Facility are secured by a pledge of the stock of the
Company's material subsidiaries and by a security interest in substantially all
of the assets of the Company and its material domestic subsidiaries. In
addition, borrowings under the Credit Facility are guaranteed by a number of the
Company's wholly-owned material domestic subsidiaries and these subsidiary
guarantees are secured by substantially all of the material domestic
subsidiaries' assets. To the extent extensions of credit are made to any
subsidiaries of the Company, the obligations of such subsidiaries are guaranteed
by the Company.

Under terms of the April 14, 2000 amendment to the Credit Facility, the Company
is obligated to pay the bank lenders an amendment fee for the April 14, 2000
amendment of 0.50% of the commitments under the Credit Facility as of April 14,
2000, totaling $8.5 million. This fee is payable on the earlier of June 30, 2000
or the closing of the Eastpak sale. On November 30, 2000, the Company must also
pay an amendment fee previously agreed to for the April 15, 1999 amendment equal
to 0.50% of the commitments under the Credit Facility as of April 15, 1999,
totaling $8.5 million. An additional amendment fee relating to the April 15,
1999 amendment equal to $8.5 million will be payable to the bank lenders if the
aggregate loan and commitment exposure under the Credit Facility is equal to or
more than $1.2 billion on November 30, 2000, with such fee being payable on June
30, 2001. The $17 million amendment fee associated with the April 15, 1999
amendment is being amortized to interest expense using the straight-line method
over the one year term of the amendment. The $8.5 million amendment fee
associated with April 14, 2000 amendment will be amortized to interest expense
using the straight-line method over the one year term of that amendment.

F-16

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

3. DEBT - (CONTINUED)

In addition to the above described ratios and tests, the Credit Facility
contains covenants customary for credit facilities of a similar nature,
including limitations on the ability of the Company and its subsidiaries,
including Coleman, to, among other things, (i) declare dividends or repurchase
stock, (ii) prepay, redeem or repurchase debt, incur liens and engage in
sale-leaseback transactions, (iii) make loans and investments, (iv) incur
additional debt, (v) amend or otherwise alter material agreements or enter into
restrictive agreements, (vi) make capital expenditures, (vii) fail to maintain
its trade receivable securitization programs, (viii) engage in mergers,
acquisitions and asset sales, (ix) engage in certain transactions with
affiliates, (x) settle certain litigation, (xi) alter its cash management system
and (xii) alter the businesses they conduct. The Credit Facility provides for
events of default customary for transactions of this type, including nonpayment,
misrepresentation, breach of covenant, cross-defaults, bankruptcy, material
adverse change arising from compliance with ERISA, material adverse judgments,
entering into guarantees and change of ownership and control. Furthermore, the
Credit Facility requires the Company to prepay loans under the Credit Facility
on December 31, 2000 to the extent that cash on hand in the Company's
concentration accounts plus the aggregate amount of unused revolving loan
commitments on that date exceed $185.0 million.

Unless waived by the bank lenders, the failure of the Company to satisfy any of
the financial ratios and tests contained in the Credit Facility or the
occurrence of any other event of default under the Credit Facility would entitle
the bank lenders to (a) receive a 2.00% increase in the interest rate applicable
to outstanding loans and increase the trade letter of credit fees to 1.00% and
(b) declare the outstanding borrowings under the Credit Facility immediately due
and payable and exercise all or any of their other rights and remedies. Any such
acceleration or other exercise of rights and remedies would likely have a
material adverse effect on the Company.

Pursuant to the April 14, 2000 amendment, term loan payments originally
scheduled for September 30, 1999 and March 31, 2000 in the amount of $69.3
million on each date are to be made as follows: (i) $69.3 million on the earlier
of the sale of Eastpak or August 15, 2000, (ii) $30.8 million on November 30,
2000 and (iii) $38.5 million on April 10, 2001. In addition, the April 14, 2000
amendment provides that the payment dates for the $69.3 million term loan
payments originally scheduled for each of September 30, 2000 and March 31, 2001,
are deferred until April 10, 2001.

In March 1998, the Company completed an offering of Zero Coupon Convertible
Senior Subordinated Debentures due 2018 (the "Debentures") at a yield to
maturity of 5.0% (approximately $2,014 million principal amount at maturity)
which resulted in approximately $730 million of net proceeds. The Debentures are
exchangeable for shares of the Company's common stock at an initial conversion
rate of 6.575 shares for each $1,000 principal amount at maturity of the
Debentures, subject to adjustment upon occurrence of certain events. The
Debentures are subordinated in right of payment to all existing and future
senior indebtedness of the Company. The Debentures are not redeemable by the
Company prior to March 25, 2003. On or after such date, the Debentures are
redeemable for cash with at least 30 days notice, at the option of the Company.
The Company is required to purchase Debentures at the option of the holder as of
March 25, 2003, March 25, 2008 and March 25, 2013, at purchase prices equal to
the issue price plus accrued original discount to such dates. The Company may,
at its option, elect to pay any such purchase price in cash or common stock, or
any combination thereof. However, the Credit Facility prohibits the Company from
redeeming or repurchasing debentures for cash. The Company was required to file
a registration statement with the Securities and Exchange Commission ("SEC") to
register the Debentures by June 23, 1998. This registration statement was filed
February 4, 1999 and, as amended, was declared effective on November 8, 1999.
The Company's failure to file the registration statement by June 23, 1998 did
not constitute a default under the terms of the Debentures. From June 23, 1998
until the registration statement was declared effective, the Company was
required to pay to the Debenture holders cash liquidated damages accruing, for
each day during such period, at a rate per annum equal to 0.25% during the first
90 days and 0.50% thereafter multiplied by the total of the issue price of the
Debentures plus the original issue discount thereon on such day. The Company has
made total payments for liquidated damages since June 23, 1998 of $4.5 million,
of which $3.0 million and $1.5 million related to damages for the years ended
December 31, 1999 and 1998, respectively.

In connection with the acquisition of Signature Brands, the Company was required
to defease $70.0 million of acquired debt. Cash was placed with a trustee to
provide for the defeasance, including the related prepayment penalty. This cash
was used to purchase Treasury Notes. Accordingly, $74.4 million of restricted
investments held by the trustee for the August 1999 liquidation of this acquired
debt are reflected as an asset and $70.0 million is reflected as short-term debt
in the Consolidated Balance Sheet at December 31, 1998. The prepayment penalty
is reflected as part of the acquisition price of Signature Brands. This debt was
redeemed in August 1999 utilizing the proceeds of the investments restricted for
this purpose.

F-17

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

3. DEBT - (CONTINUED)

In March 1998, the Company prepaid the $75.0 million, 7.85% industrial revenue
bond related to its Hattiesburg facility originally due in 2009. In connection
with the early extinguishment of this debt, the Company recognized an
extraordinary charge of $7.5 million. As a result of repayment of certain
indebtedness assumed in the Coleman acquisition, the Company also recognized an
extraordinary charge of $114.9 million. The debt assumed in connection with the
Coleman acquisition was repaid as a result of the requirements under the terms
of the Credit Facility credit agreement. These extraordinary charges consisted
of redemption premiums ($106.9 million), unamortized debt discount ($13.8
million) and unamortized deferred financing costs ($1.7 million).

During 1997, the Company repaid $12.2 million of long-term borrowings related to
the divested furniture operations and other assets sold.

At December 31, 1999, the aggregate annual maturities on short-term and
long-term debt in each of the years 2000-2004, and thereafter, were $139.8
million, $1,337.5 million, $1.0 million, $1.0 million, $1.0 million, and $5.0
million, respectively. In addition, the fully accreted Debenture amount of
$2,014 million matures in 2018. The total of annual debt maturities for all
years presented does not agree to the balance of debt outstanding at December
31, 1999 as a result of the accretion of discount on the Debentures. The
maturity schedule reflects $100 million of the outstanding balances relating to
the Credit Facility which are due in 2000, with the remainder reflected in 2001,
consistent with the expiration of the covenant waiver.

The Company believes its borrowing capacity under the Credit Facility, foreign
working capital lines, cash flow from the operations of the Company, existing
cash and cash equivalent balances, proceeds from its receivable securitization
programs, the sale of Eastpak and sales of non-core assets will be sufficient to
support planned working capital needs, planned capital expenditures and
scheduled debt service to April 10, 2001. Although management believes they will
be successful in accomplishing the above, there can be no assurance that the
aforementioned sources of funds will be sufficient to meet the Company's cash
requirements on a consolidated basis. If the Company is unable to satisfy such
cash requirements, the Company could be required to adopt one or more
alternatives, such as reducing or delaying capital expenditures, restructuring
indebtedness, selling other assets or operations or issuing additional shares of
capital stock in the Company. There can be no assurance that any of such actions
could be effected, or if so, on terms favorable to the Company, that they would
enable the Company to continue to satisfy its cash requirements or that they
would be permitted under the terms of the Credit Facility. In anticipation of
the expiration of the current waiver on April 10, 2001, the Company intends to
negotiate with its lenders on an amendment to the Credit Facility, negotiate
with its lenders on further waiver of such covenants and other terms or
refinance the Credit Facility. Any decisions with respect to such amendment,
waiver, or refinancing will be made based on a review from time to time of the
advisability of particular transactions. There can be no assurance that an
amendment, further waiver of existing covenants and other terms, or refinancing
will be entered into by April 10, 2001. The failure to obtain such an amendment,
further waiver or debt refinancing would likely result in violation of existing
covenants and compliance with other terms, which would permit the bank lenders
to accelerate the maturity of all outstanding borrowings under the Credit
Facility, which would likely have a material adverse effect on the Company.

4. FINANCIAL INSTRUMENTS

Fair Value of Financial Instruments

The fair value of the Company's financial instruments as of December 31, 1999
and 1998 was estimated based upon the following methods and assumptions:

Cash and Cash Equivalents--The carrying amount of cash and cash equivalents is
assumed to approximate fair value as cash equivalents include all highly liquid,
short-term investments with original maturities of three months or less.

Short and Long Term Debt--The fair value of the Company's fixed rate debt is
estimated using either reported transaction values or discounted cash flow
analysis. The fair value of the Company's fixed rate debt was $318 million and
$319 million as of December 31, 1999 and December 31, 1998, respectively, as
compared to a carrying value of $828 million and $859 million, respectively. The
carrying value of the Company's variable rate debt is assumed to approximate
market based upon periodic adjustments of the interest rate to the current
market rate in accordance with the terms of the debt agreements.

Letters of Credit and Surety Bonds--The Company utilizes stand-by letters of
credit to back certain financing instruments and insurance policies and
commercial letters of credit guaranteeing various international trade
activities. In addition, the Company also entered into surety bonds largely to
secure certain benefit plan obligations and as a result of environmental issues
and litigation judgements that are currently under appeal. The contract amounts
of the letters of credit and surety bonds approximate their fair values. The
contract value of letters of credit were $79.7 million and $82.3 million as of
December 31, 1999 and 1998, respectively. Contract values for surety bonds as of
December 31, 1999 and 1998 were approximately $67.5 million and $26.5 million,
respectively.

F-18

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

4. FINANCIAL INSTRUMENTS - (CONTINUED)

Derivative Financial Instruments--The Company utilizes interest rate swap
agreements to reduce the impact on interest expense of fluctuating interest
rates on its floating rate debt. The use of derivatives did not have a material
impact on the Company's operations in 1999, 1998 and 1997. At December 31, 1999
and 1998, the Company held three floating to fixed interest rate swap agreements
one with a notional value of $25 million and two with notional amounts of $150
million each. The swap agreements are contracts to exchange floating rate for
fixed interest payments periodically over the lives of the agreements without
the exchange of the underlying notional principal amounts. The swaps expire in
January 2003, June 2001 and June 2003, respectively. Under these agreements, the
Company received an average floating rate of 5.38%, 5.22% and 5.22%,
respectively, and paid an average fixed rate of 6.12%, 5.75% and 5.58%,
respectively, during 1999. In 1998, the Company received an average floating
rate of 5.64%, 5.59% and 5.59%, respectively, and paid an average fixed rate of
6.12%, 5.75%, and 5.58%, respectively. In addition, in November 1999, the
Company entered into a graduated interest rate cap agreement for a notional
amount of $455 million, expiring April 2001. The interest rate as of December
31, 1999 was 6.5% and will gradually increase to 7.0% over the term of the
agreement. The fair value of the interest rate swaps and the graduated interest
rate cap was estimated to be $3.4 million and $7.3 million at December 31, 1999
and 1998, respectively. This estimate is based upon quotes received from the
Company's banking institutions and represents the cash requirement if the
existing agreements had been terminated at the end of the year. Interest rate
swaps are off-balance-sheet instruments and therefore have no carrying value.

In order to mitigate the transaction exposures that may arise from changes in
foreign exchange rates, the Company purchases foreign currency option and
forward contracts to hedge specific transactions, principally the purchases of
inventories. The option contracts typically expire within one year. The options
are accounted for as hedges pursuant to SFAS No. 52, Foreign Currency
Translation, accordingly, gains and losses thereon are deferred and recorded in
operations in the period in which the underlying transaction is recorded. The
contracts are off-balance-sheet instruments and therefore have no carrying
value. At December 31, 1999, the Company held no purchased option contracts or
forward contracts. At December 31, 1998, the Company held purchased option
contracts with a notional value of $32.3 million and a fair value of $0.3
million and forward contracts with a notional value of $30.9 million and a fair
value of $30.5 million.

The fair values of the Company's foreign currency contracts were based on quoted
market prices of comparable contracts, adjusted through interpolation where
necessary for maturity differences.

Exposure to market risk on interest rate and foreign currency financial
instruments results from fluctuations in interest and currency rates,
respectively, during the periods in which the contracts are outstanding. The
counterparties to the Company's interest rate swap agreements and currency
exchange contracts consist of a diversified group of major financial
institutions, each of which is rated investment grade A or better. The Company
is exposed to credit risk to the extent of potential nonperformance by
counterparties on financial instruments. The Company believes the risk of
incurred losses due to credit risk is remote.

5. ACCOUNTS RECEIVABLE SECURITIZATION

The Company has entered into a receivable securitization program, which expires
March 2001, to sell without recourse, through a wholly-owned subsidiary, certain
trade accounts receivable, up to a maximum of $70 million. In March 2000, the
Company entered into an amendment to such receivables program to increase this
program to $100 million. During 1999 and 1998, the Company received
approximately $350 million and $200 million, respectively, under this
arrangement. At December 31, 1999 and 1998, the Company had reduced accounts
receivable by approximately $60 million and $20 million, respectively, for
receivables sold under this program. At December 28, 1997, the Company had
received $58.9 million under this arrangement, of which $39.1 million related to
sales recorded in fiscal 1997 and the balance related to sales to be recognized
in the first quarter of 1998. During 1997, the Company sold $19.8 million of
receivables related to bill and hold and consignment sales that had been
initially recognized in its Consolidated Financial Statements and were
subsequently reversed in the restatement process. The conditions for recognizing
these sales were met in the first quarter of 1998. Proceeds from the sales of
receivables were used to reduce borrowings under the Company's revolving credit
facility or to provide cash flow for working capital purposes, thereby reducing
the need to borrow under the Credit Facility. Costs of the program, which
primarily consist of the purchaser's financing cost of issuing commercial paper
backed by the receivables, totaled $2.8 million, $2.3 million and $0.2 million
during 1999, 1998 and 1997, respectively, and have been classified as interest
expense in the accompanying Consolidated Statements of Operations. The Company,
through a wholly-owned subsidiary, retains collection and administrative
responsibilities for the purchased receivables. In April 2000, the Company's
Coleman and Powermate subsidiaries entered into an additional revolving trade
accounts receivable securitization program to sell, without recourse, through a
wholly-owned subsidiary of Coleman, up to a maximum of $95 million in trade
accounts receivables. These trade accounts receivable programs contain
cross-default provisions that provide the

F-19

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

5. ACCOUNTS RECEIVABLE SECURITIZATION - (CONTINUED)

purchaser of the receivables an option to cease purchasing receivables from the
Company if the Company is in default under the Credit Facility. In addition,
these agreements contain various other covenants customary for these types of
programs, including financial covenants.

6. INCOME TAXES

(Loss) earnings from continuing operations before income taxes, minority
interest and extraordinary charge for each fiscal year is summarized as follows
(in thousands):

1999 1998 1997
--------- --------- ---------
Domestic............................ $(329,713) $(723,179) $ 80,946
Foreign............................. 36,527 (73,169) 11,724
--------- --------- ---------
$(293,186) $(796,348) $ 92,670
========= ========= =========

Income tax provisions include current and deferred taxes (tax benefits) for each
fiscal year as follows (in thousands):
1999 1998 1997
-------- -------- --------
Current:
Federal............................ $ (7,531) $ 1,203 $ (3,421)
State.............................. 59 275 3,266
Foreign............................ 3,245 7,189 1,683
-------- -------- --------
(4,227) 8,667 1,528
-------- -------- --------
Deferred:
Federal............................ (7,777) (6,343) 30,554
State.............................. (1,007) (1,316) 3,962
Foreign............................ 4,187 (11,138) 4,308
-------- -------- --------
(4,597) (18,797) 38,824
-------- -------- --------
$ (8,824) $(10,130) $ 40,352
======== ======== ========

The effective tax rate on (loss) earnings before income taxes, minority interest
and extraordinary charges varies from the current statutory federal income tax
rate as follows:

1999 1998 1997
-------- -------- --------

(Benefit) provision at statutory rate ............. (35.0)% (35.0)% 35.0 %
State taxes, net .................................. (3.5) -- 5.1
Amortization of intangible assets and goodwill .... 9.8 4.3 --
Warrants issued in settlement of claim ............ -- 3.1 --
Foreign earnings and dividends taxed at other rates 0.1 2.7 2.0
Valuation allowance ............................... 26.2 23.6 20.4
Reversal of tax liabilities no longer required .... -- -- (14.4)
Other, net ........................................ (0.6) -- (4.6)
-------- -------- --------
Effective tax rate (benefit) provision ............ (3.0)% (1.3)% 43.5 %
======== ======== ========

F-20

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

6. INCOME TAXES - (CONTINUED)

Significant components of the Company's deferred tax liabilities and assets are
as follows:

DECEMBER 31, DECEMBER 31,
1999 1998
--------- ---------

Deferred tax assets:
Receivables .................................. $ 15,559 $ 19,180
Postretirement benefits other than pensions .. 11,282 22,714
Reserves for self-insurance and warranty costs 45,961 40,765
Pension liabilities .......................... 24,451 16,334
Inventories .................................. 29,738 27,822
Net operating loss carryforwards ............. 405,315 322,273
Tax credits .................................. 13,016 13,510
Other, net ................................... 70,685 89,577
--------- ---------
Total deferred tax assets ................ 616,007 552,175
Valuation allowance .......................... 371,895 290,520
--------- ---------
Net deferred tax assets .................. 244,112 261,655
--------- ---------
Deferred tax liabilities:
Depreciation ................................. 33,953 43,377
Acquired intangible assets ................... 238,916 244,378
Other, net ................................... 14,216 19,850
--------- ---------
Total deferred tax liabilities ........... 287,085 307,605
--------- ---------

Net deferred tax liabilities ............. $ (42,973) $ (45,950)
========= =========

The Company establishes valuation allowances in accordance with the provisions
of SFAS No. 109. The Company continually reviews the adequacy of the valuation
allowances and recognizes tax benefits when it is more likely than not that the
benefits will be realized. During 1998, the Company increased its valuation
allowance to $291 million, which reflects management's assessment that it is
more likely than not that the deferred tax asset will not be realized through
future taxable income. This assessment was made as a result of the significant
leverage undertaken by the Company as part of its acquisitions, as well as the
operating losses incurred throughout the 1998 year.

The Company increased its valuation allowance in 1999 to $372 million to reflect
management's assessment that it is more likely than not that this amount of
deferred tax assets will not be realized through future taxable income. This
assessment was made as a result of the additional losses incurred by the Company
during 1999. At December 31, 1999, the Company had net operating loss
carryforwards ("NOLs") of approximately $888 million for domestic income tax
purposes and $142 million for foreign income tax purposes. The domestic NOLs
begin expiring in 2017. Of the foreign NOLs, $5 million, $6 million, $16
million, $14 million and $8 million expire in the years ending December 31, 2000
through 2004. Of the remaining foreign NOLs, $20 million will expire in years
subsequent to 2004 and $73 million have an unlimited life.

The Company has not provided U.S. income taxes on undistributed foreign earnings
of approximately $66 million at December 31, 1999, as the Company intends to
permanently reinvest these earnings in the future growth of the business.
Determination of the amount of unrecognized deferred U.S. income tax liability
is not practicable because of the complexities associated with its hypothetical
calculation.

7. EMPLOYEE BENEFIT PLANS

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

The Company sponsors several defined benefit pension plans covering eligible
U.S. salaried and hourly employees. Benefit accruals under such plans covering
all U.S. salaried employees were frozen, effective December 31, 1990.
Accordingly, no credit in the pension formula is given for service or
compensation after that date. However, these employees continue to earn service
toward vesting in their interest in the frozen plans as of December 31, 1990.
The Company also provides health care and life insurance benefits to certain
former employees who retired from the Company prior to March 31, 1991. The
Company has consistently followed a policy of funding the cost of postretirement
health care and life insurance benefits on a pay-as-you-go basis.

F-21

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

7. EMPLOYEE BENEFIT PLANS - (CONTINUED)

As a result of the Company's acquisitions of Coleman and First Alert (see Note
2), the liabilities for their respective defined benefit pension plans (the
"Plans") were assumed and have been accounted for in accordance with APB No. 16,
ACCOUNTING FOR BUSINESS COMBINATIONS ("APB 16"). Effective January 1, 1999, the
Coleman and First Alert salaried pension plans were amended to change the
pension benefit formula to a cash balance formula from the existing benefit
calculation. The benefits accrued under these plans as of December 31, 1998 were
frozen and converted to the new cash balance plan using a 7.0% interest rate
assumption. The effect of the amendment of the Plans is reflected in the
projected benefit obligation as of the date of acquisition as required by APB
16. Under the cash balance plan, the Company will credit certain participants'
accounts annually. At the date of acquisition the pension benefit obligation and
the fair value of the plan assets attributable to these Plans were $43.4 million
and $27.7 million, respectively, and are reflected in the table below.

In addition, Coleman provided certain unfunded postretirement health and life
insurance benefits for certain retired employees. At the date of acquisition the
postretirement benefit obligation associated with this plan was $19.5 million as
reflected in the table below, and has been accounted for in accordance with APB
16.

The Company funds all pension plans in amounts consistent with applicable laws
and regulations. Pension plan assets include corporate and U.S. government
bonds, corporate stocks, mutual funds, fixed income securities, and cash
equivalents.

Employees of non-U.S. subsidiaries generally receive retirement benefits from
Company sponsored plans or from statutory plans administered by governmental
agencies in their countries. The assets, liabilities and pension costs of the
Company's non-U.S. defined benefit retirement plans are not material to the
consolidated financial statements.

On January 1, 1998, the Company adopted SFAS No. 132, EMPLOYERS' DISCLOSURES
ABOUT PENSIONS AND OTHER POSTRETIREMENT BENEFITS ("SFAS No. 132"). This
statement revises employers' disclosures about pension and other postretirement
benefit plans. SFAS No. 132 does not change the method of accounting for such
plans.

The following table includes disclosures of the funded status and amounts
recognized in the Company's Consolidated Balance Sheets at the end of each
fiscal year as required by SFAS No. 132 (in thousands):

POSTRETIREMENT
PENSION BENEFITS BENEFITS
---------------------- ----------------------
1999 1998 1999 1998
--------- --------- --------- ---------

Change in Benefit Obligation:
Benefit obligation at beginning of year ...................... $ 188,497 $ 127,229 $ 38,866 $ 14,220
Acquisitions ................................................. -- 43,404 -- 19,477
Service cost ................................................. 1,858 1,551 877 689
Interest cost ................................................ 12,271 10,875 2,516 2,088
Actuarial (gain) loss ........................................ (9,747) 20,456 (4,403) 4,069
Benefits paid ................................................ (15,285) (15,018) (1,844) (1,677)
--------- --------- --------- ---------
Benefit obligation at end of year ............................ $ 177,594 $ 188,497 $ 36,012 $ 38,866
========= ========= ========= =========
Change in Plan Assets:
Fair value of plan assets at beginning of year ............... $ 144,437 $ 116,485 $ -- $ --
Acquisitions ................................................. -- 27,657 -- --
Actual return on plan assets ................................. (2,112) 6,424 -- --
Employer contributions ....................................... 15,519 8,889 1,844 1,677
Benefits paid ................................................ (15,285) (15,018) (1,844) (1,677)
--------- --------- --------- ---------
Fair value of plan assets at end of year ..................... $ 142,559 $ 144,437 $ -- $ --
========= ========= ========= =========
Reconciliation of Funded Status:
Funded status ................................................ $ (35,035) $ (44,060) $ (36,012) $ (38,866)
Unrecognized net actuarial loss/(gain) ....................... 47,820 48,616 (716) 3,829
Unrecognized prior service cost .............................. -- -- (10,047) (12,991)
--------- --------- --------- ---------
Net amount recognized ........................................ $ 12,785 $ 4,556 $ (46,775) $ (48,028)
========= ========= ========= =========

Amounts Recognized in the Consolidated Balance Sheets Consist of:
Accrued benefit liability .................................... $ (35,256) $ (42,431) $ (46,775) $ (48,028)
Accumulated other comprehensive income ....................... 48,041 46,987 -- --
--------- --------- --------- ---------
Net amount recognized ........................................ $ 12,785 $ 4,556 $ (46,775) $ (48,028)
========= ========= ========= =========

F-22

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

7. EMPLOYEE BENEFIT PLANS - (CONTINUED)

In determining the actuarial present value of the benefit obligation, the
weighted average discount rate was 7.50% and 6.75% as of December 31, 1999 and
1998, respectively; the expected return on plan assets ranged from 7.50% to
9.00% for 1999 and ranged from 6.75% to 9.00% for 1998. The expected increase in
future compensation levels was 4.00% for Coleman for 1999 and 1998.

The assumed health care cost trend rates used in measuring the accumulated
postretirement benefit obligation were 7.0% to 8.0% for the plans for 2000 and
were assumed to decrease gradually to between 5.0% and 5.5% by 2003 and remain
at these levels thereafter.

Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plan. A one-percentage-point change in assumed
health care cost trend rates would have the following effects (in thousands):

1-PERCENTAGE- 1-PERCENTAGE-
POINT INCREASE POINT DECREASE

Effect on total of service and interest cost components.............................. $642 $(507)
Effect on the postretirement benefit obligation...................................... $5,668 $(4,555)

Net pension expense and periodic postretirement benefit include the following
components (in thousands):

PENSION BENEFITS POSTRETIREMENT BENEFITS
-------------------------------- --------------------------------
1999 1998 1997 1999 1998 1997
-------- -------- -------- -------- -------- --------

Components of net periodic pension benefit cost:
Service cost .................................. $ 1,858 $ 1,551 $ 157 $ 877 $ 689 $ --
Interest cost ................................. 12,271 10,875 8,970 2,516 2,088 996
Expected return of market value of assets ..... (8,775) (10,127) (8,586) -- -- --
Amortization of unrecognized prior service cost -- -- -- (2,944) (2,943) (2,942)
Recognized net actuarial loss ................. 1,936 735 414 -- -- --
-------- -------- -------- -------- -------- --------
Net periodic benefit cost (benefit) ........... 7,290 3,034 955 449 (166) (1,946)
Settlement charge ............................. -- -- 615 -- -- --
Curtailment charge ............................ -- -- 106 -- -- --
-------- -------- -------- -------- -------- --------
Total expense (benefit) ....................... $ 7,290 $ 3,034 $ 1,676 $ 449 $ (166) $ (1,946)
======== ======== ======== ======== ======== ========

The projected benefit obligation, accumulated benefit obligation and fair value
of plan assets for the plans with accumulated benefit obligations in excess of
plan assets were $175.3 million, $146.1 million and $121.1 million at December
31, 1999 and $186.4 million, $161.6 million and $125.5 million at December 31,
1998, respectively.

DEFINED CONTRIBUTION PLANS

As a result of the Company's acquisitions of Coleman, First Alert and Signature
Brands, the Company amended its Savings & Investment and Profit Sharing Plan
("Savings Plan") to assume the assets of the respective savings plans at each of
the acquired companies and establish parity with the benefits provided by the
Company. Effective January 1, 1999, all eligible employees could participate in
the Savings Plan. Company contributions to these plans include employer matching
contributions as well as discretionary contributions depending on the
performance of the Company, in an amount up to 10% of eligible compensation. The
Company provided $3.9 million in 1999, $1.9 million in 1998, and $1.8 million in
1997 for its defined contribution plans.

8. SHAREHOLDERS' EQUITY

COMMON STOCK

At December 31, 1999, the Company had 500,000,000 shares of $0.01 par value
common stock authorized and there were 22,495,854 shares of common stock
reserved for issuance upon the exercise of outstanding stock options.

F-23

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

8. SHAREHOLDERS' EQUITY - (CONTINUED)

PURCHASE OF COLEMAN PREFERRED STOCK

On July 12, 1999, the Company acquired 3,000,000 shares of a newly created
series of Coleman voting preferred stock for an aggregate purchase price of
approximately $31 million. The issue price of the voting preferred stock was
equal to 110% of the average closing price per share of common stock of Coleman
over the five trading days prior to the date of the issuance of the voting
preferred stock. These shares, together with the shares of Coleman common stock
the Company owned at such time, enabled the Company to exercise 80.01% of the
total voting power of Coleman's outstanding capital stock as of July 12, 1999.
This class of preferred stock was created by Coleman and acquired by the Company
in order to enable Coleman and the Company to file consolidated federal income
tax returns, and in certain jurisdictions, consolidated state income tax
returns, prior to the consummation of the Coleman merger. In connection with the
issuance of the shares of preferred stock, Coleman entered into a tax sharing
agreement with the Company pursuant to which Coleman will pay to the Company
amounts equal to the federal and state income taxes that would have been payable
by Coleman had Coleman not been included in the consolidated income tax return
of the Company. The net proceeds from the issuance of the shares by Coleman of
its voting preferred stock to the Company were used by Coleman to make a partial
repayment of the intercompany loan outstanding from the Company. The preferred
stock was exchanged for 3,000,000 shares of Coleman common stock immediately
prior to the consummation of the Coleman merger.

COMPENSATORY STOCK GRANTS

On February 20, 1998, the Company entered into new three-year employment
agreements with its then Chairman and Chief Executive Officer and two other then
senior officers of the Company. These agreements replaced previous employment
agreements entered into in July 1996 that were scheduled to expire in July 1999.

The new employment agreement for the Company's then Chairman and Chief Executive
Officer provided for, among other items, the acceleration of vesting of 200,000
shares of restricted stock and the forfeiture of 133,334 shares of unvested
restricted stock granted under the July 1996 agreement, a new equity grant of
300,000 shares of unrestricted stock, a new grant of a ten-year option to
purchase 3,750,000 shares of the Company's common stock with an exercise price
equal to the fair market value of the stock at the date of grant and exercisable
in three equal annual installments beginning on the date of grant and the
acceleration of vesting of 833,333 outstanding stock options granted under the
July 1996 agreement, as further described in Note 9. In addition, the new
employment agreement with the then Chairman and Chief Executive Officer provided
for income tax gross-ups with respect to any tax assessed on the equity grant
and acceleration of vesting of restricted stock.

The new employment agreements with the two other then senior officers provided
for, among other items, the grant of a total of 180,000 shares of restricted
stock that were to vest in four equal annual installments beginning on the date
of grant, the acceleration of vesting of 44,000 shares of restricted stock and
the forfeiture of the remaining 29,332 shares of unvested restricted stock
granted under the July 1996 agreements, new grants of ten-year options to
purchase a total of 1,875,000 shares of the Company's common stock with an
exercise price equal to the fair market value of the stock at the date of grant
and exercisable in four equal annual installments beginning on the date of grant
and the acceleration of vesting of 383,334 outstanding stock options granted
under the July 1996 agreements. In addition, the new employment agreements
provided for income tax gross-ups with respect to any tax assessed on the
restricted stock grants and acceleration of vesting of restricted stock.

Compensation expense attributed to the equity grant, the acceleration of vesting
of restricted stock and the related income tax gross-ups was recognized in the
first quarter of 1998 and compensation expense related to the new restricted
stock grants and related tax gross-ups was amortized to expense beginning in the
first quarter of 1998 with amortization to continue over the period in which the
restrictions lapse. Total compensation expense recognized in 1998 related to
these items was approximately $31 million.

On June 15, 1998, the Company's board of directors announced the removal of the
then Chairman and Chief Executive Officer and subsequently announced the removal
or resignation of other senior officers, including the Company's then Chief
Financial Officer. In connection with the removal or resignation of the senior
officers and the termination of their restricted stock grants, the unamortized
portion of the deferred compensation expense attributable to the restricted
stock grants was reversed. The Company and certain of its former officers are in
disagreement as to the Company's obligations to these individuals under prior
employment agreements and arising from their terminations. (See Note 15.)

F-24

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

8. SHAREHOLDERS' EQUITY - (CONTINUED)

ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive loss consist of the following
(in thousands):

MINIMUM
TRANSLATION PENSION
ADJUSTMENTS LIABILITY TOTAL
----------- --------- ---------

Balance at December 28, 1997................. $(12,850) $(20,213) $(33,063)
Balance at December 31, 1998................. (12,022) (42,008) (54,030)
Balance at December 31, 1999................. (25,245) (48,041) (73,286)

The accumulated other comprehensive loss associated with the minimum pension
liability is net of deferred income taxes of approximately $5.0 million in 1998
and 1997.

9. EMPLOYEE STOCK OPTIONS AND AWARDS

The Company has one stock-based compensation plan, the Amended and Restated
Sunbeam Corporation Stock Option Plan (the "Plan"). Under the Plan, all
employees are eligible for grants of options to purchase up to an aggregate of
16,300,000 shares of the Company's common stock at an exercise price equal to or
in excess of the fair market value of the stock on the date of grant. The term
of each option commences on the date of grant and expires on the tenth
anniversary of the date of grant subject to earlier cancellation. Options
generally become exercisable over a three to five year period.

The Plan also provides for the grant of restricted stock awards of up to 200,000
shares, in the aggregate, to employees and non-employee directors. The Plan
provides that each non-employee director of the Company is automatically granted
1,500 shares of restricted common stock upon his or her initial election or
appointment and upon each subsequent re-election to the Company's board of
directors. In the event of an election or appointment to the Company's board of
directors at any time other than at the annual meeting of stockholders, the
director receives a prorated amount of restricted common shares. These
restricted common shares vest immediately upon the non-employee director's
acceptance of his or her election or appointment to the Company's board of
directors. The Company granted 7,500, 6,000, and 6,000 shares of restricted
stock to non-employee directors in 1999, 1998 and 1997, respectively, and
recognized compensation expense related to these grants of $0.1 million in 1999
and $0.2 million in each of 1998 and 1997. See Note 8 for a discussion of
restricted stock awards made outside the Plan.

In July 1996, options to purchase an aggregate of 3,000,000 shares (of which
2,750,000 options were outstanding at December 28, 1997) were granted outside of
the Plan at exercise prices equal to the fair market value of the Company's
common stock on the dates of grant in connection with the employment of a then
new Chairman and Chief Executive Officer and two other senior officers of the
Company. These outstanding options have terms of ten years and, with respect to
options for 2,500,000 shares, were exercisable in three annual installments
beginning July 17, 1996. Options for the remaining 250,000 shares still
outstanding were exercisable in three annual installments beginning on the first
anniversary of the July 22, 1996 grant date. On February 20, 1998 the vesting
provisions of the options granted outside the Plan were accelerated. Additional
stock option grants outside the Plan were made in February 1998, with a portion
thereof subsequently terminated in connection with the removal of the then
Chairman and Chief Executive Officer. The then Chairman and Chief Executive
Officer and another senior officer are disputing termination of their stock
option grants. (See Notes 8 and 15.)

In the third and fourth quarters of 1998, options to purchase an aggregate of
4,200,000 shares were granted outside of the Plan in connection with the
employment of the new Chief Executive Officer and certain members of the new
senior management team. The options were granted to certain senior executives at
exercise prices equal to or greater than the fair market value of the Company's
common stock on the dates of the grant. The senior officers were granted options
to purchase 3,200,000 shares of common stock at a price of $7.00 per share;
500,000 shares of common stock at a price of $10.50 per share and 500,000 shares
at a price of $14.00 per share. All of these outstanding options have terms of
ten years and become fully exercisable at the end of two to three year periods
if the executive remains employed by the Company as of such date.

F-25

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

9. EMPLOYEE STOCK OPTIONS AND AWARDS - (CONTINUED)

In August 1998, the Company approved a plan to exchange outstanding common stock
options held by the Company's employees. The exchange program, which has been
completed, provided for outstanding options with exercise prices in excess of
$10.00 per share to be exchanged for new options on a voluntary basis in an
exchange ratio ranging from approximately two to three old options for one new
option, (as determined by reference to a Black-Scholes option pricing model)
with the exercise price of the new options set at $7.00 per share. These options
were repriced at an exercise price approximating the market value of the
Company's common stock at the date of the repricing and, consequently, there was
no related compensation expense.

The Company applies APB Opinion No. 25 and related interpretations in accounting
for its stock options. Accordingly, no compensation cost has been recognized for
outstanding stock options. Had compensation cost for the Company's outstanding
stock options been determined based on the fair value at the grant dates for
those options consistent with SFAS No. 123, the Company's net (loss) earnings
and basic and diluted (loss) earnings per share would have differed as reflected
by the pro forma amounts indicated below (in thousands, except per share
amounts):

1999 1998 1997
----------- ------------- ----------
Net (loss) earnings:
As reported ................... $ (299,519) $ (897,923) $ 38,301
Pro forma ..................... (331,842) (1,023,932) 14,524

Basic (loss) earnings per share:
As reported ................... (2.97) (9.25) 0.45
Pro forma ..................... (3.29) (10.54) 0.17

Diluted (loss) earnings per share:
As reported ................... (2.97) (9.25) 0.44
Pro forma ..................... (3.29) (10.54) 0.17

The Company's pro forma net loss for 1998 includes approximately $68 million of
compensation cost relating to options issued to the former Chairman and Chief
Executive Officer (3,750,000) and a former senior officer (1,125,000) in
connection with their February 1998 employment agreements. These options are
included in the outstanding and exercisable options issued outside the plan in
the following table. The Company and these individuals are in dispute regarding
the status of these options.

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions:

1999 1998 1997
--------- --------- --------

Expected volatility......................... 55.90% 52.80% 34.19%
Risk-free interest rate..................... 6.49% 4.68% 6.36%
Dividend yield.............................. 0.0% 0.0% 0.1%
Expected life............................... 5 years 6 years 6 years

F-26

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

9. EMPLOYEE STOCK OPTIONS AND AWARDS - (CONTINUED)

A summary of the status of the Company's outstanding stock options as of
December 31, 1999 and 1998 and December 28, 1997, and changes during the years
ended on those dates is presented below:

1999 1998 1997
---------------------------- --------------------------- ----------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES EXERCISE PRICE
---------- -------------- ---------- -------------- ---------- --------------

Plan options:
Outstanding at beginning
of year....................... 5,612,908 $13.32 6,654,068 $25.61 6,271,837 $19.43
Granted....................... 6,092,275 5.67 6,663,998 17.13 3,105,263 32.40
Exercised..................... (6,932) 5.00 (879,088) 22.25 (1,549,196) 17.20
Canceled...................... (1,027,397) 13.90 (6,826,070) 27.75 (1,173,836) 21.10
---------- ---------- ----------
Outstanding at end of
year....................... 10,670,854 $ 8.98 5,612,908 $13.32 6,654,068 $25.61
========== ========== =========
Options exercisable at
year-end................... 3,358,424 $14.74 1,717,545 $20.91 1,547,198 $19.13
Weighted-average fair
value of options
granted during the
year....................... $ 3.29 $10.47 $15.46
Options outside plan:
Outstanding at beginning
of year.................... 11,825,000 $21.01 2,750,000 $12.43 2,750,000 $12.43
Granted....................... -- -- 9,825,000 24.62 -- --
Canceled...................... -- -- (750,000) 36.85 -- --
--------- --------- ---------
Outstanding at end of
year....................... 11,825,000 $21.01 11,825,000 $21.01 2,750,000 $12.43
========== ========== =========
Options exercisable at
year-end................... 7,625,000 $28.04 7,625,000 $28.04 1,750,000 $12.35
Weighted-average fair
value of options
granted during the
year....................... N/A $13.71 N/A

Included in the outstanding and exercisable options issued outside the plan, as
presented above, are options issued to the former Chairman and Chief Executive
Officer (3,750,000) and a former senior officer (1,125,000) in connection with
their February 1998 employment agreements. The Company and these individuals are
in a dispute regarding the status of these options.

The following table summarizes information about stock options outstanding at
December 31, 1999:

OPTIONS OUTSTANDING
NUMBER WEIGHTED-AVERAGE
RANGE OF OUTSTANDING REMAINING WEIGHTED-AVERAGE
EXERCISE PRICES AT 12/31/99 CONTRACTUAL LIFE (YEARS) EXERCISE PRICE
- --------------- ----------- ------------------------ --------------

$4.38 to $6.18....................................... 3,332,394 9.53 $ 4.76
$6.19 to $6.68....................................... 2,225,267 9.08 6.66
$6.69 to $7.00....................................... 5,478,648 8.31 6.99
$7.01 to $12.25...................................... 3,903,823 7.35 11.08
$12.26 to $26.22..................................... 2,411,107 7.06 17.93
$26.23 to $36.85..................................... 5,017,152 8.06 36.61
$36.86 to $50.51..................................... 127,463 7.72 40.98
---------- ---- -------
$4.38 to $50.51...................................... 22,495,854 8.21 $ 15.31
========== ==== =======

F-27

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

9. EMPLOYEE STOCK OPTIONS AND AWARDS -- (CONTINUED)

OPTIONS EXERCISABLE
-------------------
NUMBER
RANGE OF EXERCISABLE WEIGHTED-AVERAGE
EXERCISE PRICES AT 12/31/99 EXERCISE PRICE
- --------------- ---------- ---------
$4.38 to $6.18 .................... 138,524 $ 5.28
$6.19 to $6.68 .................... 119,656 6.57
$6.69 to $7.00 .................... 1,082,521 6.98
$7.01 to $12.25 ................... 2,703,349 11.99
$12.26 to $26.22 .................. 1,831,127 18.78
$26.23 to $36.85 .................. 5,006,094 36.62
$36.86 to $50.51 .................. 102,153 40.67
---------- ---------
$4.38 to $50.51 ................... 10,983,424 $ 23.98
========== =========

10. SUPPLEMENTARY FINANCIAL STATEMENT DATA

Supplementary Balance Sheet data at the end of each fiscal year is as follows
(in thousands):

1999 1998
--------- ---------
Receivables:
Trade ................................. $ 404,905 $ 407,452
Sundry ................................ 3,777 7,347
--------- ---------
408,682 414,799
Valuation allowance ...................... (44,344) (53,025)
--------- ---------
$ 364,338 $ 361,774
========= =========
Inventories:
Finished goods ........................ $ 330,179 $ 370,622
Work in process ....................... 30,691 39,143
Raw materials and supplies ............ 99,810 109,424
--------- ---------
$ 460,680 $ 519,189
========= =========
Prepaid expenses and other current assets:
Deferred income taxes ................. $ 38,701 $ 40,756
Prepaid expenses and other ............ 33,429 33,431
--------- ---------
$ 72,130 $ 74,187
========= =========
Property, plant and equipment:
Land .................................. $ 10,864 $ 10,664
Buildings and improvements ............ 185,987 168,685
Machinery and equipment ............... 377,760 395,763
Furniture and fixtures ................ 21,950 18,208
--------- ---------
596,561 593,320
Accumulated depreciation and amortization. (149,445) (138,148)
--------- ---------
$ 447,116 $ 455,172
========= =========

F-28

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

10. SUPPLEMENTARY FINANCIAL STATEMENT DATA -- (CONTINUED)

1999 1998
----------- -----------
Trademarks, tradenames, goodwill and other:
Trademarks and tradenames ................. $ 597,110 $ 597,515
Goodwill .................................. 1,196,812 1,254,880
Deferred financing costs .................. 50,407 47,325
Other intangible assets ................... 27,884 28,012
----------- -----------
1,872,213 1,927,732
Accumulated amortization .................. (156,155) (101,783)
----------- -----------
1,716,058 1,825,949
Other assets .............................. 31,228 33,428
----------- -----------
$ 1,747,286 $ 1,859,377
=========== ===========
Other current liabilities:
Payrolls, commissions and employee benefits $ 70,345 $ 61,294
Advertising and sales promotion ........... 56,950 56,288
Product warranty .......................... 51,370 50,287
Sales returns ............................. 15,425 16,972
Interest .................................. 18,325 25,850
Other ..................................... 88,394 110,494
----------- -----------
$ 300,809 $ 321,185
=========== ===========
Other long-term liabilities:
Accrued postretirement benefit obligation . $ 46,775 $ 48,028
Accrued pension ........................... 35,256 42,431
Product liability and workers compensation 72,750 71,868
Other ..................................... 86,483 86,132
----------- -----------
$ 241,264 $ 248,459
=========== ===========

Supplementary Statement of Cash Flows data for each fiscal year are summarized
as follows (in thousands):

1999 1998 1997
--------- --------- ---------
Cash paid (received) during the period for:

Interest (net of interest received) .... $ 163,491 $ 80,807 $ 13,058
========= ========= =========

Income taxes (net of refunds) .......... $ (7,461) $ (17,358) $ (44,508)
========= ========= =========

11. ASSET IMPAIRMENT AND OTHER CHARGES

During the fourth quarter of 1999, the Company announced its intent to sell its
Eastpak business ("Eastpak"). In March 2000, the Company entered into the
Eastpak Sale Agreement with VF Corporation to sell Eastpak. The final purchase
price is subject to certain post closing adjustments and retention of certain
liabilities. Eastpak, a wholly-owned subsidiary of Coleman, was acquired by the
Company in March 1998. Net sales from Eastpak were approximately 5% of
consolidated net sales in both 1999 and 1998. Operating income both 1999 and
1998 was not significant. In the fourth quarter of 1999, as a result of the
Company's change in business strategy for Eastpak, an evaluation for impairment
of Eastpak's long-lived assets was performed pursuant to SFAS No. 121. Based
upon this analysis, the Company determined that the fair market value of
Eastpak's long-lived assets including intangibles, was less than the carrying
value. Accordingly, during the fourth quarter of 1999, the Company adjusted the
carrying value of Eastpak's net assets to its estimated fair value (less
estimated costs of sale) resulting in a non-cash impairment charge of $52
million. This charge reduced the goodwill associated with Eastpak. The fair
market value of Eastpak was determined based upon the purchase price in the
Eastpak Sale Agreement. This charge is reflected in SG&A in the 1999
Consolidated Statements of Operations. Eastpak is included in the Company's
Outdoor Leisure business group.

F-29

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

11. ASSET IMPAIRMENT AND OTHER CHARGES - (CONTINUED)

In the fourth quarter of 1999, in connection with the completion of the
Company's 2000 strategic planning process, the decision was made to discontinue
a number of products, primarily scales, humidifiers and certain camping stoves,
lights and air mattresses, previously made by the Company, resulting in
equipment and tooling that will no longer be utilized by the Company and
inventory levels in excess of anticipated sales volume. In addition, as a result
of the Company's business planning process, which was completed in the fourth
quarter of 1999, the Company identified certain other assets that would no
longer be required for ongoing operations. Accordingly, a charge of $8.0 million
was recorded in the fourth quarter of 1999 in Cost of Goods Sold to write
certain of these fixed assets down to their estimated fair market values.
Substantially all of this charge related to machinery, equipment and tooling at
the Company's Hattiesburg, Mississippi manufacturing facility. These assets were
taken out of service at the time of the write-down and were not depreciated
further after the write-down. These assets had a nominal salvage value and or no
significant remaining carrying value as of December 31, 1999 and are expected to
be disposed of during the first half of 2000. Depreciation expense associated
with these assets approximated $0.9 million in 1999, $0.6 million in 1998 and
$0.4 million in 1997. During the fourth quarter of 1999 the Company also made
the decision to discontinue certain grill and grill accessory stock keeping
units ("SKUs"). As a result of this decision, the Company reduced the economic
useful life associated with the machinery, equipment and tooling used for these
SKUs. Approximately $3 million of additional depreciation expense was recorded
over the fourth quarter of 1999 from the time the decision was made to exit the
product line until production ceased at December 31, 1999 and resulted in the
affected assets being fully depreciated. Depreciation expense associated with
these assets was $4.6 million in 1999, $1.5 million in 1998, and $0.4
million in 1997. These assets are expected to be disposed of during the first
half of 2000, and the Company does not expect to generate significant proceeds
as a result of the disposals. Additionally, as a result of the Company's
decision to discontinue certain camping stoves, lights, air mattresses, scales
and humidifiers, a $3.0 million charge was recorded during the fourth quarter of
1999 to properly state this inventory at the lower-of-cost-or-market. The
Company also recognized approximately $0.8 million related to certain other
product lines to properly state the inventory at the lower-of-cost-or-market.
These charges for excess inventories were based upon management's best estimate
of net realizable value.

In the fourth quarter of 1998, the Company recorded a $62.5 million charge for
the write-off of the carrying value of First Alert's goodwill (see Note 2).

In the second quarter of 1998, as a result of decisions to outsource or
discontinue a substantial number of products previously made by the Company
(principally breadmakers, toasters and certain other appliances, air and water
filtration products and the elimination of certain SKUs within existing product
lines, primarily relating to appliances, grills and grill accessories), certain
facilities and equipment that would no longer be used were identified.
Accordingly, a charge of $29.6 million was recorded in Cost of Goods Sold to
write certain of these assets down to their estimated fair market value.
Approximately 80% of this charge related to machinery, equipment and tooling at
the Company's Mexico City and Hattiesburg, Mississippi manufacturing plants, the
estimated fair value for which was derived through an auction process. The
remainder of this charge related to tooling and equipment at various other
facilities, which either had a nominal value or the fair market value of which
was derived through an auction process. These assets were taken out of service
at the time of the write-down and consequently were not depreciated further
after the write-down. The net carrying value of these assets after the
write-down approximated $2.2 million and these assets were disposed of by
December 31, 1999. Depreciation expense associated with these assets
approximated $2.6 million in 1998, $4.2 million in 1997 and $3.5 million in
1996.

Personnel at the Mexico City facility were notified in the second quarter of
1998 that the plant was scheduled for closure at year-end 1998, accordingly, at
that time, a liability of $1.8 million was recorded in Cost of Goods Sold
primarily for employee severance. The employee severance related to
approximately 1,200 positions of which approximately 1,100 were terminated, and
$1.4 million paid in severance as of December 31, 1998. Substantially all of the
remaining positions were eliminated and severance payments were made by July 31,
1999. In the third quarter of 1998, the Company recorded in Cost of Goods Sold,
an additional provision for impairment of fixed assets of $3.1 million in an
acquired entity, relating to assets taken out of service for which there was no
remaining value. The asset impairment resulted from management's decision,
during the third quarter, to discontinue certain SKUs within product lines
(principally generators, compressors and propane cylinders) subsequent to the
acquisition. These fixed assets were taken out of service at the time of the
write-down and consequently were not depreciated further after the write-down.
Depreciation expense associated with these assets approximated $0.8 million in
1998. In the fourth quarter of 1998, the Company recorded a $7.1 million charge
as a result of management's decision, during the fourth quarter, to outsource
the production of certain appliances (principally irons). This charge to Cost of
Goods Sold primarily consisted of a provision for certain tooling and equipment
($6.7 million) and severance and related benefits ($0.4 million). This tooling
and equipment, which had no remaining value, was written off. These fixed assets
were taken out of service at the time of the write-down, and consequently
depreciation was discontinued at the time of the write-down. Depreciation
expense associated with these assets approximated $2.4 million in 1998, $2.3
million in 1997 and $0.9 million in 1996. The severance costs related to
approximately 45 production employees. Substantially all of these employees'
positions were eliminated and the severance obligation was paid by December 31,
1999.

F-30

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

11. ASSET IMPAIRMENT AND OTHER CHARGES - (CONTINUED)

During 1997 and the first half of 1998, the Company built inventories in
anticipation of 1998 sales volumes which did not materialize. As a result, it
was necessary to dispose of some portions of excess inventories at amounts less
than cost. Accordingly, during 1998, when the facts and circumstances were known
that such sales volume would not materialize, the Company recorded $58.2 million
in charges (of which $46.4 million, $2.2 million and $9.6 million, were recorded
during the second, third and fourth quarters, respectively) to properly state
this inventory at the lower-of-cost-or-market. This inventory primarily related
to certain appliances, grills and grill accessories. The Company also recorded a
charge of $11.0 million during the second quarter for excess inventories for raw
materials and work in process that will not be used due to outsourcing the
production of breadmakers, toasters and certain other appliances. In addition,
during 1998, the Company made the decision to exit certain product lines,
primarily air and water filtration products and eliminate certain SKUs within
existing product lines, primarily relating to appliances, grills and grill
accessories. As a result of this decision, a $26.6 million charge was recorded
during the second quarter to properly state this inventory at the
lower-of-cost-or-market. Total charges for excess inventories recorded at the
lower-of-cost-or-market, based on management's best estimate of net realizable
value, amounted to approximately $95.8 million at December 31, 1998. (See Note
12 for asset impairment and other charges recorded in conjunction with a 1996
restructuring plan.)

12. RESTRUCTURING

In November 1996, the Company announced the details of a restructuring plan. The
plan included the consolidation of administrative functions within the Company,
the reduction of manufacturing and warehouse facilities, the centralization of
the Company's procurement function, and reduction of the Company's product
offerings and SKUs. The Company also announced plans to divest several lines of
business (see Note 13). As part of the restructuring plan, the Company
consolidated six divisional and regional headquarters' functions into a single
worldwide corporate headquarters and outsourced certain back office activities
resulting in a reduction in total back-office/administrative headcount. Overall,
the restructuring plan called for a reduction in the number of production
facilities from 26 to 8 and the elimination of over 6,000 positions from the
Company's workforce, including 3,300 from the disposition of certain business
operations and the elimination of approximately 2,800 other positions, some of
which were outsourced. The Company completed the major phases of the
restructuring plan by July 1997.

The restructuring charge recorded during 1996 included severance and other
employee costs relating to the elimination of approximately 3,700 positions
excluding approximately 2,400 employees terminated from the furniture business
for which severance was included in Loss on Sale of Discontinued Operations (see
Note 13). In 1997, approximately 1,800 employees were terminated from continuing
operations. Due largely to attrition, a number of the planned terminations were
not required. In 1997, the Company determined that its severance and employee
benefit costs were less than originally accrued principally due to lower than
expected COBRA and workers compensation costs, and accordingly reversed accruals
of $7.9 million in the third quarter ($2.1 million) and fourth quarter ($5.8
million). At December 31, 1997, the balance accrued of $1.2 million represented
the remaining severance and employee benefit costs for certain employees
terminated during 1997. During 1998, all amounts were expended.

The amounts accrued at December 29, 1996, for Restructuring and Asset Impairment
Charges recorded in fiscal 1996, exceeded amounts ultimately required
principally due to reductions in anticipated severance and employee benefit
costs of $7.9 million, as discussed above, and reductions in estimated lease
payments of $6.7 million ($3.7 million and $3.0 million recognized in the third
and fourth quarters, respectively) resulting from better than anticipated
rentals received under sub-leases and favorable negotiation of lease
terminations. Accordingly, the fiscal 1997 Consolidated Statement of Operations
included $14.6 million of benefit ($5.8 million in the third quarter and $8.8
million in the fourth quarter of 1997) related to the reversal of accruals no
longer required, which were recorded as these reduced obligations became known.

At December 28, 1997, the Company had $5.2 million in liabilities accrued
related to the 1996 restructuring plan, including $1.2 million of severance
related costs and $4.0 million related to facility closures, which principally
represented future lease payments (net of sub-leases) on exited facilities. The
remaining balance in the restructuring reserve of $0.6 million and $1.2 million
at December 31, 1999 and 1998, respectively, relates to facility closures. The
liability was reduced during 1999 and 1998 as a result of cash expenditures.

F-31

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

12. RESTRUCTURING - (CONTINUED)

The following table sets forth the details and the activity from the charges (in
millions):

ACCRUAL ACCRUAL
BALANCE ADDITIONS BALANCE
DECEMBER 30, CHARGED TO CASH NON-CASH DECEMBER 28,
1996 INCOME REDUCTIONS REDUCTIONS REVERSALS 1997
-------- ------- ------- ------- ------- ------

Write-downs:
Fixed assets, held for disposal, used
until disposed ............................. $ 14.8 $ -- $ -- $ 14.8 $ -- $ --
Other assets, principally trademarks and
intangible assets .......................... 1.1 -- -- 1.1 -- --
-------- ------- ------- ------- ------- ------
15.9 -- -- 15.9 -- --
-------- ------- ------- ------- ------- ------
Restructuring accruals:
Employee severance pay and fringes ............ 19.1 -- 10.0 -- 7.9 1.2
Lease payments and termination fees ........... 12.6 -- 2.6 -- 6.7 3.3
Other exit activity costs, principally facility
closure expenses ........................... 4.1 -- 3.4 -- -- 0.7
-------- ------- ------- ------- ------- ------
35.8 -- 16.0 -- 14.6 5.2
-------- ------- ------- ------- ------- ------
Total restructuring and asset
impairment accrual ............................ 51.7 -- 16.0 15.9 14.6 5.2
Discontinued operations .......................... 58.2 22.5 6.1 71.6 -- 3.0
-------- ------- ------- ------- ------- ------
$ 109.9 $ 22.5 $ 22.1 $ 87.5 $ 14.6 $ 8.2
======== ======= ======= ======= ======= ======

ACCRUAL BALANCE ACCRUAL BALANCE
DECEMBER 29, CASH DECEMBER 31,
1997 REDUCTIONS 1998
------ ------ ------

Restructuring accruals:
Employee severance pay and fringes ............................. $ 1.2 $ 1.2 $ --
Lease payments and termination fees ............................ 3.3 2.1 1.2
Other exit activity costs, principally facility closure expenses 0.7 0.7 --
------ ------ ------
Total restructuring accrual ....................................... 5.2 4.0 1.2
------ ------ ------
Discontinued operations ........................................... 3.0 2.5 0.5
------ ------ ------
$ 8.2 $ 6.5 $ 1.7
====== ====== ======

ACCRUAL BALANCE ACCRUAL BALANCE
JANUARY 1, CASH DECEMBER 31,
1999 REDUCTIONS 1999
------ ------ ------

Restructuring accruals:
Lease payments and termination fees ............................ $ 1.2 $ 0.6 $ 0.6
------ ------ ------

Total restructuring accrual ....................................... 1.2 0.6 0.6
------ ------ ------

Discontinued operations ........................................... 0.5 0.2 0.3
------ ------ ------

$ 1.7 $ 0.8 $ 0.9
====== ====== ======

F-32

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

13. DISCONTINUED OPERATIONS

As part of the 1996 restructuring plan, the Company also announced the
divestiture of the furniture business, by a sale of assets. In February 1997,
the Company entered into an agreement to sell the business to U.S. Industries,
Inc. in a transaction that was completed on March 17, 1997. Revenues for the
discontinued furniture business were $51.6 million in the first quarter of 1997
and results of operations were nominal. The final purchase price for the
furniture business was subject to a post-closing adjustment based on the terms
of the asset purchase agreement and in the first quarter of 1997, after
completion of the sale, the Company recorded an additional loss of $14.0
million, net of applicable income tax benefits of $8.5 million.

In addition to the furniture business divestiture, the Company also completed
the sale of other product lines and assets in 1997 as part of its restructuring
plan, including time and temperature products, Counselor and Borg scales and a
textile facility. Losses incurred on the disposal of these assets, which consist
primarily of write-downs of assets to net realizable value were reserved for in
1996.

14. SEGMENT, CUSTOMER AND GEOGRAPHIC DATA

Sunbeam's operations are managed through four reportable segments: Household,
Outdoor Leisure, International and Corporate. Reportable segments are identified
by the Company based upon the distinct products manufactured (Household and
Outdoor Leisure) or based upon the geographic region in which its products are
distributed (International). The Company's reportable segments are all
separately managed.

The Household group consists of appliances (including mixers, blenders, food
steamers, bread makers, rice cookers, coffee makers, toasters, irons and garment
steamers), health products (including vaporizers, humidifiers, air cleaners,
massagers, hot and cold packs and blood pressure monitors), scales, personal
care products (including hair clippers and trimmers and related products for the
professional beauty, barber and veterinarian trade and sales of products to
commercial and institutional channels), blankets (including electric blankets,
heated throws and mattress pads) and through the Company's wholly-owned
subsidiary, First Alert products (smoke and carbon monoxide detectors, fire
extinguishers and home safety equipment).

The Outdoor Leisure group includes outdoor recreation products (which encompass
tents, sleeping bags, coolers, camping stoves, lanterns and outdoor heaters),
outdoor cooking products (including gas and charcoal outdoor grills and grill
parts and accessories), Powermate products (including portable power generators
and air compressors), and Eastpak and Timberland branded products (including
backpacks and bags).

The International group is managed through five regional subdivisions: Europe,
Latin America, Japan, Canada and East Asia. Europe includes the manufacture,
sales and distribution of Campingaz products and sales and distribution in
Europe, Africa and the Middle East of other Company products. The Latin American
region includes the manufacture, sales and distribution throughout Latin America
of small appliances, and sales and distribution of personal care products,
professional clippers and related products, camping products and Powermate
products. Japan includes the sales and distribution of primarily outdoor
recreation products. Canada includes sales of substantially all the Company's
products and East Asia encompasses sales and distribution in all areas of East
Asia other than Japan of substantially all the Company's products.

The Company's Corporate group provides certain management, accounting, legal,
risk management, treasury, human resources, tax and management information
services to all operating groups and also includes the operation of the
Company's retail stores and the conduct of the Company's licensing activities.
The Corporate group also includes the operations of the Company's Thalia
subsidiary. The Thalia subsidiary is developing Home Linking Technology which is
designed to allow products to communicate with each other.

The accounting policies of the operating segments are the same as those
described in the summary of significant accounting policies (see Note 1) except
that certain bad debt expense is recorded at a consolidated level and included
in the Corporate group. Sunbeam evaluates performance and allocates resources
based upon profit or loss from operations before amortization, income taxes,
minority interest, interest expense, significant and unusual gains and losses
and foreign exchange gains and losses. Intersegment sales and transfers are
primarily recorded at cost.

F-33

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

14. SEGMENT, CUSTOMER AND GEOGRAPHIC DATA - (CONTINUED)

The following tables include selected financial information with respect to
Sunbeam's four operating segments. Business segment information for prior years
has been reclassified to conform to the current year presentation.

OUTDOOR
HOUSEHOLD LEISURE INTERNATIONAL CORPORATE TOTAL
--------- ------- ------------- --------- -----

Year Ended December 31, 1999
Net sales to unaffiliated customers $ 837,057 $ 958,147 $ 583,684 $ 19,091 $ 2,397,979
Intersegment net sales ............ 81,253 150,938 7,050 -- 239,241
Segment operating earnings (loss) . 48,402 69,039 53,058 (96,702) 73,797
Segment assets .................... 707,436 1,707,559 385,200 332,154 3,132,349
Segment depreciation expense ...... 25,986 40,018 6,076 10,130 82,210

Year Ended December 31, 1998
Net sales to unaffiliated customers $ 722,462 $ 653,771 $ 435,372 $ 25,266 $ 1,836,871
Intersegment net sales ............ 62,971 111,583 98,120 -- 272,674
Segment operating loss ............ (53,445) (60,430) (20,189) (123,471) (257,535)
Segment assets .................... 863,628 1,801,892 415,078 324,919 3,405,517
Segment depreciation expense ...... 24,404 30,789 3,395 5,448 64,036

Year Ended December 28, 1997
Net sales to unaffiliated customers $ 568,921 $ 258,484 $ 229,572 $ 16,113 $ 1,073,090
Intersegment net sales ............ 100,355 3,520 64,549 -- 168,424
Segment operating earnings (loss) . 73,210 8,205 43,793 (42,915) 82,293
Segment assets .................... 510,183 141,332 167,591 239,822 1,058,928
Segment depreciation expense ...... 15,358 9,494 3,204 3,872 31,928

Reconciliation of selected segment information to Sunbeam's consolidated totals
for the years ended:

DECEMBER 31, DECEMBER 31, DECEMBER 28,
1999 1998 1997
----------- ----------- -----------

Net sales:
Net sales for reportable segments ..................................... 2,637,220 $ 2,109,545 $ 1,241,514
Elimination of intersegment net sales ................................. (239,241) (272,674) (168,424)
----------- ----------- -----------
Consolidated net sales ............................................. $ 2,397,979 $ 1,836,871 $ 1,073,090
=========== =========== ===========
Segment (loss) earnings:
Total (loss) earnings for reportable segments ......................... $ 73,797 $ (257,535) $ 82,293
Unallocated amounts:
Interest expense ................................................... (200,181) (130,607) (11,381)
Other income (expense), net ........................................ 3,599 4,284 (12)
Amortization of intangible assets .................................. (49,796) (43,830) (7,829)
Provision for inventory and fixed assets (Notes 11 and 12) ......... (15,068) (135,230) --
Issuance of warrants (Note 2) ...................................... -- (70,000) --
Former employees deferred compensation and severance (Note 8) ...... (4,716) (34,400) --
Restructuring, asset impairment and related charges (Note 12) ...... (52,000) (62,500) (15,800)
Restructuring benefit (Note 12) .................................... -- -- 14,582
Year 2000 and system initiative expenses ........................... (27,279) (10,000) --
Restatement related charges ........................................ (7,607) (20,400) --
Litigation and environmental and other reserve adjustments (Note 17) (11,292) (3,659) 27,963
Purchase accounting adjustments (Note 17) .......................... -- (28,100) --
Other (charges) benefit ............................................ (2,643) (4,371) 2,854
----------- ----------- -----------
(366,983) (538,813) 10,377
----------- ----------- -----------
Consolidated (loss) earnings from continuing
operations before income taxes, minority interest
and extraordinary charge ...................................... $ (293,186) $ (796,348) $ 92,670
=========== =========== ===========

F-34

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

14. SEGMENT, CUSTOMER AND GEOGRAPHIC DATA - (CONTINUED)

ENTERPRISE-WIDE DISCLOSURES

Net sales on a global basis from the Company's Household products represented
43%, 50%, and 73% of consolidated net sales in 1999, 1998 and 1997,
respectively. Net sales from the Company's Outdoor Leisure products category
represented 56%, 50%, and 25% of consolidated net sales in 1999, 1998 and 1997,
respectively.

FISCAL YEARS ENDED
----------------------------------------
1999 1998 1997
---------- ---------- ----------
Geographic Area Data
Net sales to unaffiliated customers:
United States ................... $1,814,295 $1,401,499 $ 843,518
Europe .......................... 239,725 170,909 17,415
Latin America ................... 148,108 158,670 164,044
Other ........................... 195,851 105,793 48,113
---------- ---------- ----------
Total net sales .................... $2,397,979 $1,836,871 $1,073,090
========== ========== ==========
Identifiable assets:
United States ................... $2,747,149 $2,990,439 $ 891,337
Europe .......................... 232,896 244,916 9,703
Latin America ................... 66,995 86,872 127,036
Other ........................... 85,309 83,290 30,852
---------- ---------- ----------
Total identifiable assets .......... $3,132,349 $3,405,517 $1,058,928
========== ========== ==========

Revenue from one retail customer in the United States in Sunbeam's Household and
Outdoor Leisure segments accounted for approximately 19%, 18%, and 20% of
consolidated net sales in 1999, 1998 and 1997, respectively. Receivables from
this customer excluding the effect of the Company's receivable securitization
program, approximated $85.0 million and $62.6 million at December 31, 1999 and
1998, respectively. The Company establishes its credit policies based on an
ongoing evaluation of its customers' creditworthiness and competitive market
conditions and establishes its allowance for doubtful accounts based on an
assessment of exposures to credit losses at each balance sheet date. The Company
believes its allowance for doubtful accounts is sufficient based on the credit
exposures outstanding.

15. COMMITMENTS AND CONTINGENCIES

LITIGATION

On April 23, 1998, two class action lawsuits were filed on behalf of purchasers
of the Company's common stock in the U.S. District Court for the Southern
District of Florida against the Company and some of its present and former
directors and former officers alleging violations of the federal securities laws
as discussed below. After that date, approximately fifteen similar class actions
were filed in the same Court. One of the lawsuits also named as defendant Arthur
Andersen LLP, ("Arthur Andersen") the Company's independent accountants for the
period covered by the lawsuit.

F-35

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

15. COMMITMENTS AND CONTINGENCIES - (CONTINUED)

During 1998, purported class action and derivative lawsuits were filed in the
Court of Chancery of the State of Delaware in New Castle County and in the U.S.
District Court for the Southern District of Florida by stockholders of the
Company against the Company, MacAndrews & Forbes and some of the Company's
present and former directors. These complaints allege, among other things, that
the defendants breached their fiduciary duties when the Company entered into a
settlement agreement with the MacAndrews & Forbes subsidiary that sold the
Company a controlling interest in Coleman. In such settlement agreement, the
MacAndrews & Forbes subsidiary released the Company from threatened claims
arising out of the Company's acquisition of its interest in Coleman, and
MacAndrews & Forbes agreed to provide management support to the Company. Under
the settlement agreement, the MacAndrews & Forbes subsidiary was granted a
warrant expiring August 24, 2003 to purchase up to an additional 23 million
shares of the Company's common stock at an exercise price of $7 per share,
subject to anti-dilution provisions. The plaintiffs have requested an injunction
against the issuance of stock to MacAndrews & Forbes upon the exercise of its
warrant and unspecified money damages. The derivative actions filed in the
Delaware Court of Chancery were consolidated. In February 1999, the plaintiffs
voluntarily dismissed this action. The action filed in the U.S. District Court
for the Southern District of Florida has been dismissed.

F-36

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

15. COMMITMENTS AND CONTINGENCIES - (CONTINUED)

In July 1998, the American Alliance Insurance Company ("American Alliance")
filed suit against the Company in the U.S. District Court for the Southern
District of New York requesting a declaratory judgment of the court that the
directors' and officers' liability insurance policy for excess coverage issued
by American Alliance was invalid and/or had been properly canceled by American
Alliance. As a result of a motion made by the Company, this case has been
transferred to the U.S. District Court for the Southern District of Florida for
coordination and consolidation of pre-trial proceedings with the various actions
pending in that court. In October 1998, an action was filed by Federal Insurance
Company ("Federal Insurance") in the U.S. District Court for the Middle District
of Florida requesting the same relief as that requested by American Alliance in
the previously filed action as to additional coverage levels under the Company's
directors' and officers' liability insurance policy. This action has been
transferred to the U.S. District Court for the Southern District of Florida.
Discovery in the cases brought by American Alliance and Federal Insurance is
underway and coordinated with the discovery in the Consolidated Federal Actions.
In December 1998, an action was filed by Executive Risk Indemnity, Inc. in the
Circuit Court of the Seventeenth Judicial Circuit in and for Broward County,
Florida requesting the same relief as that requested by American Alliance and
Federal Insurance in their previously filed actions as to additional coverage
levels under the Company's directors' and officers' liability insurance policy.
In April 1999, the Company filed an action in the U.S. District Court for the
Southern District of Florida against National Union Fire Insurance Company of
Pittsburgh, PA ("National Union"), Gulf Insurance Company ("Gulf") and St. Paul
Mercury Insurance Company ("St. Paul") requesting, among other things, a
declaratory judgment that National Union is not entitled to rescind its
directors' and officers' liability insurance policies to the Company and a
declaratory judgment that the Company is entitled to coverage from these
insurance companies for the various lawsuits described herein under directors'
and officers' liability insurance policies issued by each of the defendants. The
Company has settled its litigation with National Union. In response to the
Company's complaint, defendants St. Paul and Gulf have answered and asserted
counterclaims seeking rescission and declaratory relief that no coverage is
available to the Company. The Company intends to pursue recovery from all of its
insurers if damages are awarded against the Company or its indemnified officers
and/or directors under any of the foregoing actions and to recover attorneys'
fees covered under those policies. The Company's failure to obtain such
insurance recoveries following an adverse judgment in any of the actions
described above could have a material adverse effect on the Company's financial
position, results of operations or cash flows.

By letter dated June 17, 1998, the staff of the Division of Enforcement of the
SEC advised the Company that it was conducting an informal inquiry into the
Company's accounting policies and procedures and requested that the Company
produce certain documents. In July 1998, the SEC issued a Formal Order of
Private Investigation, designating SEC officers to take testimony and pursuant
to which a subpoena was served on the Company requiring the production of
certain documents. In November 1998, another SEC subpoena requiring the
production of additional documents was received by the Company. The Company has
provided numerous documents to the SEC staff and continues to cooperate with the
SEC staff. The Company has, however, declined to provide the SEC with material
that the Company believes is subject to the attorney-client privilege and the
work product immunity. The SEC has not commenced any civil or administrative
proceedings as a result of its investigation, and the Company cannot predict at
this time whether the SEC will seek to impose any monetary or other penalties
against the Company. Under these circumstances, the Company cannot estimate the
duration of the investigation or its outcome.

F-37

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

15. COMMITMENTS AND CONTINGENCIES - (CONTINUED)

Amounts accrued for litigation matters represent the anticipated costs (damages
and/or settlement amounts) in connection with pending litigation and claims and
related anticipated legal fees for defending such actions. The costs are accrued
when it is both probable that an asset has been impaired or a liability has been
incurred and the amount can be reasonably estimated. The accruals are based upon
the Company's assessment, after consultation with counsel, of probable loss
based on the facts and circumstances of each case, the legal issues involved,
the nature of the claim made, the nature of the damages sought and any relevant
information about the plaintiffs and other significant factors which vary by
case. When it is not possible to estimate a specific expected cost to be
incurred, the Company evaluates the range of probable loss and records the
minimum end of the range. As of December 31, 1999, the Company had established
accruals for litigation matters of $24.3 million (representing $9.6 million and
$14.7 million for estimated damages or settlement amounts and legal fees,
respectively) and $31.2 million as of December 31, 1998 (representing $17.5
million and $13.7 million for estimated damages or settlement amounts and legal
fees, respectively). It is anticipated that the $24.3 million accrual at
December 31, 1999 will be paid as follows: $20.8 million in 2000, $3.4 million
in 2001 and $0.1 million in 2002. The Company believes, based on information
available on December 31, 1999, that anticipated probable costs of litigation
matters existing as of December 31, 1999 have been adequately reserved to the
extent determinable.

ENVIRONMENTAL MATTERS

F-38

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

15. COMMITMENTS AND CONTINGENCIES - (CONTINUED)

The Company has established reserves to cover the anticipated probable costs of
investigation and remediation, based upon periodic reviews of all sites for
which the Company has, or may have remediation responsibility. The Company
accrues environmental investigation and remediation costs when it is probable
that a liability has been incurred, the amount of the liability can be
reasonably estimated and the Company's responsibility for the liability is
established. Generally, the timing of these accruals coincides with the earlier
of formal commitment to an investigation plan, completion of a feasibility study
or the Company's commitment to a formal plan of action. As of December 31, 1999
and 1998, the Company's environmental reserves were $19.9 million (representing
$ 18.2 million for the estimated costs of facility investigations, corrective
measure studies, or known remedial measures, and $1.7 million for estimated
legal costs) and $25.0 million (representing $22.9 million for the estimated
costs of facility investigations, corrective measure studies, or known remedial
measures, and $2.1 million for estimated legal costs), respectively. It is
anticipated that the $19.9 million accrual at December 31, 1999 will be paid as
follows: $3.8 million in 2000, $2.9 million in 2001, $2.5 million in 2002, $0.7
million in 2003, $0.6 million in 2004 and $9.4 million thereafter. The Company
has accrued its best estimate of investigation and remediation costs based upon
facts known to the Company at such dates and because of the inherent
difficulties in estimating the ultimate amount of environmental costs, which are
further described below, these estimates may materially change in the future as
a result of the uncertainties described below. Estimated costs, which are based
upon experience with similar sites and technical evaluations, are judgmental in
nature and are recorded at undiscounted amounts without considering the impact
of inflation and are adjusted periodically to reflect changes in applicable laws
or regulations, changes in available technologies and receipt by the Company of
new information. It is difficult to estimate the ultimate level of future
environmental expenditures due to a number of uncertainties surrounding
environmental liabilities. These uncertainties include the applicability of laws
and regulations, changes in environmental remediation requirements, the
enactment of additional regulations, uncertainties surrounding remediation
procedures including the development of new technology, the identification of
new sites for which the Company could be a PRP, information relating to the
exact nature and extent of the contamination at each site and the extent of
required cleanup efforts, the uncertainties with respect to the ultimate outcome
of issues which may be actively contested and the varying costs of alternative
remediation strategies. The Company continues to pursue the recovery of some
environmental remediation costs from certain of its liability insurance
carriers; however, such potential recoveries have not been offset against
potential liabilities and have not been considered in determining the Company's
environmental reserves.

PRODUCT LIABILITY MATTERS

BRK Brands, Inc. and Sunbeam (Canada Limited) are defendants in an alleged class
action lawsuit in Ontario, Canada that claims, among other things, that the
defendants failed to adequately inform consumers regarding the performance of
smoke detectors utilizing ionization technology. The alleged class action
consists of all consumers in Ontario, Canada who have purchased ionization
detectors manufactured or sold by the defendants or their predecessors. BRK
Brands is also a defendant in two separate alleged class action lawsuits in the
United States, one in the United States District Court for the Northern District
of Alabama and the other in Circuit Court, Twentieth Judicial District, St.
Clair, Illinois (the "U.S. Class Action"). The plaintiffs in the U.S. Class
Action made substantially the same allegations as the plaintiff in the
above-alleged class action in Ontario, Canada. The defendants intend to
vigorously defend this lawsuit, but cannot predict the outcome and is not
currently able to evaluate the likelihood of the defendant's success or the
range of potential loss, if any. However, if the defendants' were to lose one of
these lawsuits, it could have a material adverse effect on the defendants'
financial position, results of operations or cash flows.

F-39

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

15. COMMITMENTS AND CONTINGENCIES - (CONTINUED)

The Company is party to various personal injury and property damage lawsuits
relating to its products and incidental to its business. Annually, the Company
sets its product liability insurance program which is an occurrence based
program based on the Company's current and historical claims experience and the
availability and cost of insurance. The Company's program for 1999 was comprised
of a self-insurance retention of $3.5 million per occurrence, and was limited to
$28.0 million in the aggregate.

LEASES

The Company rents certain facilities, equipment and retail stores under
operating leases. Rental expense for operating leases amounted to $28.9 million
in 1999, $31.4 million in 1998, and $7.4 million for 1997. The minimum future
rentals due under noncancelable operating leases as of December 31, 1999
aggregated to $135.3 million. The amounts payable in each of the years 2000-2004
and thereafter are $18.7 million, $16.6 million, $16.2 million, $13.1 million,
$11.1 million and $59.6 million, respectively.

CERTAIN DEBT OBLIGATIONS

Responsibility for servicing certain debt obligations of the Company's
predecessor were assumed by third parties in connection with the acquisition of
former businesses, although the Company's predecessor remained the primary
obligor in accordance with the respective loan documents. Such obligations,
which amounted to approximately $16.1 million at December 31, 1999, and the
corresponding receivables from the third parties, are not included in the
Consolidated Balance Sheets since these transactions occurred prior to the
issuance of SFAS No. 76, EXTINGUISHMENT OF DEBT. Management believes that the
third parties will continue to meet their obligations pursuant to the assumption
agreements.

PURCHASE AND OTHER COMMITMENTS

In conjunction with the sale of the Biddeford, Maine textile mill in 1997, the
Company entered into a five-year agreement to purchase blanket shells from the
mill. The agreement, as amended, provides for a minimum purchase commitment each
year of the contract.

In connection with Coleman Powermate's 1995 purchase of substantially all of the
assets of Active Technologies, Inc. ("ATI"), the Company may be required to make
payments to the predecessor owner of ATI of up to $18.8 million based on the
Company's sales of ATI related products and royalties received by the Company
for licensing arrangements related to ATI patents. As of December 31, 1999, the
amounts paid under the terms of this agreement have been immaterial.

16. RELATED PARTY TRANSACTIONS

SERVICES PROVIDED BY M&F

Pursuant to the settlement agreement with M&F, M&F agreed to make certain
executive management personnel available to the Company and to provide certain
management assistance to the Company. The Company does not reimburse M&F for
such services, other than reimbursement of out-of-pocket expenses paid to third
parties. (See Note 2.)

F-40

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

16. RELATED PARTY TRANSACTIONS - (CONTINUED)

LIQUIDATION OF OPTIONS

In accordance with the Coleman merger agreement, the unexercised options under
Coleman's stock option plans were cashed out in December 1999 at a price per
share equal to the difference between $27.50 per share and the exercise price of
such options. Ronald O. Perelman, the sole stockholder of M&F, held 500,000
options for which he received a net payment, subsequent to the 1999 fiscal year
end, of $6,750,000. Coleman stock options held by employees were cashed out in
December 1999. Messrs. Shapiro and Isko and Ms. Clark, executive officers of the
Company, held 77,500, 20,000 and 25,000 options, respectively, for which they
received net payments of $823,000, $226,099, and $275,005, respectively.

ARRANGEMENTS BETWEEN COLEMAN AND M&F

Coleman and an affiliate of M&F are parties to a cross-indemnification agreement
pursuant to which Coleman has agreed to indemnify such affiliate, its officers,
directors, employees, control persons, agents and representatives against all
past, present and future liabilities, including product liability and
environmental matters, related to the initial assets of Coleman, which Coleman
acquired from such affiliate in December 1991. In addition, pursuant to this
cross-indemnification agreement, the M&F affiliate has agreed to indemnify
Coleman and its officers, directors, employees, agents and representatives
against all other liabilities of such M&F affiliate or any of its subsidiaries,
including liabilities relating to the assets it did not transfer to Coleman in
December 1991. This cross-indemnification agreement survived the Coleman merger.

Coleman previously was included in the consolidated tax group for the M&F
companies and was a party to a tax sharing agreement with a M&F affiliate,
pursuant to which Coleman paid to such affiliate the amount of taxes which would
have been paid by Coleman if it were required to file separate federal, state or
local income tax returns. The tax sharing agreement was terminated upon the
acquisition of Coleman; however, the acquisition agreement provides for certain
tax indemnities and tax sharing payments among the Company and the M&F
affiliates relating to periods prior to the acquisition.

LEASE OF OFFICE SPACE

During 1999 and 1998, the Company sublet office space in New York City from an
affiliate of M&F. The expense for such rent during 1999 and 1998 was
approximately $90,000 and $130,000, respectively. The lease was terminated in
1999.

F-41

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

17. UNAUDITED QUARTERLY FINANCIAL DATA

FISCAL 1999(a)
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
(Dollars in millions, except per share data)

Net sales ............................................. $523.9 $660.9 $ 601.6 $ 611.6
Gross profit .......................................... 126.5 173.7 162.8 141.6
Operating (loss) profit ............................... (14.8) 13.5 4.3 (99.6)
Net loss .............................................. (60.7) (46.9) (47.4) (144.5)
Basic and diluted loss per share ...................... (0.60) (0.47) (0.47) (1.43)

During 1999, significant unusual charges affected the respective quarters as
follows:

FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------ ------ ------- -------

Provision for inventory and fixed assets (Note 11) .... $ 0.3 $-- $ 0.5 $ 14.2
Severance ............................................. -- -- 0.5 4.2
Asset impairment ...................................... -- -- -- 52.0
Year 2000 systems initiatives expenses ................ 8.1 5.4 6.8 7.0
Costs associated with financial statement restatement . -- 3.6 1.2 2.8
Litigation, environmental and other reserve adjustments -- 0.5 3.7 7.1
Other (charges) benefits .............................. 1.1 0.3 0.3 0.9
------ ------ ------- -------
Total ................................................. $ 9.5 $ 9.8 $ 13.0 $ 88.2
====== ====== ======= =======

FISCAL 1998(a)
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
(Dollars in millions, except per share data)

Net sales ............................................. $247.6 $578.5 $ 496.0 $ 514.8
Gross profit (loss) ................................... 35.4 (50.8) 69.3 1.1
Operating loss ........................................ (37.4) (193.3) (161.0) (278.3)
Loss from continuing operations before extraordinary
charge ............................................. (45.6) (241.0) (188.9) (300.0)
Basic and diluted loss per share from continuing
operations before extraordinary charge ............. (0.53) (2.39) (1.88) (2.98)
Extraordinary charge .................................. (8.6) (103.1) -- (10.7)
Net loss .............................................. (54.1) (344.1) (188.9) (310.8)
Basic and diluted loss per share ...................... (0.63) (3.41) (1.88) (3.09)

During 1998, significant unusual charges affected the respective quarters as
follows:

FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------

Compensation agreements with former senior officers (Note 8).... $ 30.7 $ -- $ 3.7 $--
Excess and obsolete inventory reserves (Note 11) ............... -- 84.0 2.2 9.6
Facilities impairment charges (Note 11) ........................ -- 29.6 3.1 6.7
Warrants issued to M&F (Note 2) ................................ -- -- 70.0 --
Costs associated with financial statement restatement .......... -- -- 10.8 9.6
Goodwill impairment (Note 2) ................................... -- -- -- 62.5
Litigation, environmental and other reserve adjustments (3.0) -- 1.7 5.0
------ ------ ------- -------
Total .......................................................... $ 27.7 $113.6 $ 91.5 $ 93.4
====== ====== ======= =======

(a) Due to the net loss incurred, earnings per share calculations exclude
common share equivalents for all four quarters and for the year in 1998
and 1999. Loss per share is computed independently for each of the
quarters presented. Therefore, the sum of the quarterly loss per share
in 1998 does not equal the total computed for the year.

F-42

SUNBEAM CORPORATION AND SUBSIDIARIES
SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

Fiscal Years 1999, 1998 and 1997
(Dollars in thousands)

ADDITIONS
BALANCE AT CHARGED TO RESERVES BALANCE AT
BEGINNING COSTS AND FROM END OF
DESCRIPTION OF PERIOD EXPENSES ACQUISITIONS DEDUCTIONS PERIOD
- ----------- -------- -------- --------- -------- --------

Allowance for doubtful accounts and cash discounts:

Fiscal year ended December 31, 1999 ............ $ 53,025 $ 13,249 $ -- $ 21,930(b) $ 44,344
======== ======== ========= ======== ========

Fiscal year ended December 31, 1998 ............ $ 30,033 $ 32,919 $ 15,216(c) $ 25,143(b) $ 53,025
======== ======== ========= ======== ========

$(2,000)(a)
Fiscal year ended December 28, 1997 ............ $ 19,701 $ 17,297 $ -- 8,948(b) $ 30,033
17(d)
======== ======== ========= ======== ========

Notes: (a) Reclassified to/from accrued liabilities for customer deductions.
(b) Accounts written off as uncollectible.
(c) Reserve balances of acquired companies at acquisition date.
(d) Foreign currency translation adjustment.

F-43

EXHIBIT INDEX

EXHIBIT DESCRIPTION
------- -----------

10.mm Ninth Amendment to Credit Agreement dated as of November 30,
1999, among the Company, the Subsidiary Borrowers referred to
therein, the Lenders party thereto, Morgan Stanley Senior
Funding, Inc., Bank America National Trust and Savings
Association and First Union National Bank
21. Subsidiaries of the Registrant
23.1 Independent Auditors' Consent--Deloitte & Touche LLP
23.2 Consent of Independent Auditors-- Ernst & Young LLP
23.3 Consent of Independent Certified Public Accountants--Arthur
Andersen LLP
27. Financial Data Schedule, submitted electronically to the
Securities and Exchange Commission for information only and not
filed